Earlier this month, Congress passed and the President signed into law the PPP Flexibility Act. The PPP Flexibility Act modifies various provisions related to the forgiveness and repayment of loans made to small businesses under the previous version of the program. Highlights include:

Businesses now have 24 weeks to spend their PPP loan proceeds on qualifying expenses. Previously, they were required to spend the money in just 8 weeks.
 
The rule previously required that at least 75% of PPP loan amounts had to be spent on payroll costs in order to receive loan forgiveness. Now, that floor has been dropped to only 60% (meaning that businesses now have more money to spend on non-payroll expenses like rent and utilities).
 
Formerly, employers were required to restore employee headcount and wages to pre-pandemic levels by June 30, 2020, or risk losing full loan forgiveness. Under the new law, employers now have until December 31 to do so.
 
Full loan deferment until the bank makes a decision on whether the business’s PPP loan is forgivable or partially forgivable. Previously, the loan deferment period was just six months. Additionally, if the loan is not eligible for full forgiveness, the loan term has been extended to 5 years at 1% interest.
Overall, these changes in the new law are more favorable for small businesses and contain better forgiveness terms than were in effect previously. A reminder that funds are still available if you have not yet applied.

By Rebecca D. Bullard, rbullard@dsda.com