PPP Flexibility Act
Monday, June 8, 2020
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Posted by: Sabrina Hidalgo
JUNE 8, 2020: Members of religious institutes who are currently participating in the Paycheck Protection Program (“PPP”) should be aware of legislation recently signed into law.
On June 5, 2020 President Donald Trump signed the Paycheck Protection Program Flexibility Act (“PPP Flexibility Act”) into law making several modifications to the Paycheck Protection Program. The bill, H.R. 7010, was passed by the US House of Representatives on May 28, 2020 with a vote of 417-1. The US Senate passed H.R. 7010 unanimously by voice vote on June 3, 2020.
The PPP Flexibility Act causes a number of changes to the Paycheck Protection Program including:
1. An extension of the forgiveness from eight weeks to twenty-four weeks, which is optional for existing PPP borrowers. This will also presumably affect the relevant covered period for measuring reductions in employees or salary and wages.
2. A requirement for forgiveness to use 60 percent of the PPP loan monies on permissible payroll costs. Previously, the percentage of payroll costs was 75 percent.
3. The deadline to re-hire employees for an exemption to the forgiveness limitation is extended from June 30, 2020 to December 31, 2020.
4. A five-year loan maturity term for all new PPP loans. Existing loans will remain at two years unless a mutual agreement to extend has been reached by both the borrower and the lender.
5. All recipients of a PPP loan may now take advantage of the CARES Act provision which permits deferred payment of the employer’s share of Social Security taxes due on wages paid through the end of the year.
6. The addition of an exemption for re-hiring employees based on a reduction in the level of business activity due to COVID-19 and governmental response.
7. The addition of an extension of the payment deferral period until loan forgiveness is granted or a loan forgiveness application is not timely filed.
Please contact RCRI for additional information and analysis regarding the PPP Flexibility Act and how it could affect religious institutes. Additional guidance is expected from the Small Business Administration (“SBA”) and the Department of the Treasury in the near future.
Additional information from the SBA and Department of the Treasury regarding the PPP Flexibility Act will be shared by RCRI once it is received.
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