17 Jun Congress Makes Changes to the Paycheck Protection Program Flexibility Act
Posted at 13:51h in COVID-19 TOOLKIT 0 Comments
As ADA President Dr. Chad Gehani stated in his June 4 message, Congress recently passed the Paycheck Protection Program Flexibility Act, a bill which will significantly revise the SBA loan program that was created at the outset of the pandemic.
Changes to the program include:
- Shifting the coverage period of the loan from eight weeks to 24 weeks. In other words, PPP funds can now be used for up to 24 weeks from the date of distribution, allowing dental offices more flexibility in the allocation of funds.
- Deferring payroll tax for PPP loan borrowers through Dec. 31, 2020. Fifty percent of the deferred amount will be due Dec. 31, 2021, and the other 50 percent of the deferred amount will be due Dec. 31, 2022. For an explanation on how this will affect your cash flow and financial statements, consult your accountant.
- Deferring PPP loan repayment for 10 months instead of six months.
- Changing the way PPP funds can be apportioned. While the PPP program originally required borrowers to use 75 percent of the requested funds for payroll expenses in order to be eligible for forgiveness, the new Flexibility act lessens that requirement and allows borrowers to use 40 percent of funds for non-payroll expenses while still being eligible for full forgiveness.
- Extending the rehiring deadline to offset FTE unemployment levels. Borrowers will have until December 31, 2020, to return their FTE levels to their status pre-COVID.
- Extending the maturity date. If any portion of the PPP loan was not under previous guidelines/SBA Interim rules, that portion of the loan would originally mature and be due two years from the date of disbursement. That time has been extended, allowing the loan to mature up to five years from the date of disbursement.
For questions about how these new provisions will affect your practice, contact your accountant or local loan servicer.
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