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PPP Flexibility Act Extends Forgiveness, Eases Requirements for Employers

PPP loan advice best practices for your money

Update: June 16, 2020

The Small Business Administration (SBA), in conjunction with the U.S. Treasury, released a revised application and instructions for PPP loan forgiveness, as well as an EZ version of the application for certain borrowers.

This article offers an overview of the Payroll Protection Plan, as well as latest news, including:

Payroll Payroll Protection Flexibility Act

Signed into law on June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 gives business owners more time to use PPP money and still qualify for loan forgiveness. It also gives more flexibility to use PPP loan funding for non-payroll expenses.

A statement issued on June 8, 2020 clarified that partial loan forgiveness under the Payroll Protection Flexibility Act will also be available under the 60% threshold.

In other words, if a borrower uses less than 60% of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness. Read the statement.

Among the notable changes the Act makes to the PPP:

  • Extends the PPP loan forgiveness period to include costs incurred over 24 weeks after a loan is issued, or through Dec. 31, 2020, whichever comes first.
  • Extends the period where a loan could be forgiven to December 31, 2020, from the current June 30, 2020, if businesses restore staffing or salary levels that were previously reduced. The provision would apply to worker and wage reductions made from February 15 through the end of April.
  • Allows companies that document their inability to rehire workers employed as of February 15, 2020, as well as their inability to find similarly qualified workers by the end of the year, to remain qualified for loan forgiveness.
  • Lowers the minimum percentage of PPP funds borrowers have to spend on payroll costs from 75% to 60%, in order to have their loan forgiven.
  • Repeals a provision from the CARES Act that barred companies with forgiven PPP loans from deferring their payroll tax payments.
  • Allows borrowers to defer principal and interest payments on PPP loans until the SBA compensates lenders for any forgiven amounts, instead of the current six-month deferral period. Borrowers that don’t apply for forgiveness would be given at least 10 months after the program expires to start making payments.
  • Establishes a minimum loan maturity period of five years following an application for loan forgiveness, instead of the current two years set by the SBA. That provision would apply to PPP loans issued after the measure is enacted, though borrowers and lenders could agree to extend current loans.

PPP loan forgiveness resources

To make the forgiveness process as simple as possible, clients of simplicityHR can access a PPP Loan Forgiveness Worksheet through HR Symphony. The worksheet helps gather required information and assists in determining the potential forgiveness amount for your PPP loan.

Login to HR Symphony to download the PPP Loan Forgiveness Worksheet. Detailed instructions are available in the HR Symphony Resource Library.

PPP Emergency Loan Fund Reopened April 2020

On April 27, 2020, the SBA’s $659 billion Payroll Protection Plan emergency loan program relaunched.

The new bill includes:

  • $310 billion in the replenishment of PPP funds
  • $60 billion for the Economic Injury Disaster Loan program
  • $75 billion for hospital support
  • $25 billion for a new coronavirus testing program

What this means for you

If you have not filed for a PPP loan, and you and your advisor decide it is the right choice for your business, you have another chance to apply.  Call your bank or financial advisor to start the process.

If you have already applied for a PPP loan, please check with your lender about the status of your application in the queue for approval. You may also stop the process once the loan is approved, if you decide you no longer need the funds.

Clients of simplicityHR by ALTRES can get their PPP reports by logging into HR Symphony.

The Paycheck Protection Program at a Glance

business owner in Hawaii trying to understand PPP loan availability and requirements

The SBA-administered Paycheck Protection Program (PPP) is an emergency loan program enacted as part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The program is intended to assist businesses in keeping employees on payroll while riding out the period of national shutdown due to COVID-19.

The program provides loans that the SBA says may be forgiven if used to cover payroll, most mortgage interest, rent, and utilities amid current economic uncertainty related to coronavirus. (Source).

According to the U.S. Department of Treasury, loan forgiveness is based on the monies being used at least 60% for payroll, including benefits, which must be maintained at normal levels. Forgiveness decreases if jobs and salaries are reduced but may be adjusted if employees are rehired.

More details here: SBA Paycheck Protection Program

Who is eligible for Payroll Protection Program loans?

Most businesses with fewer than 500 employees are eligible to apply, including certain nonprofits, veterans’ organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors.

Independent contractors were able to apply for the loans on April 10, 2020.

For businesses in the hard-hit hotel and food service industry, the 500-employee rule is applied on a per physical location basis. (US Treasury Fact Sheet PDF)

More information

How to get a loan through the Payroll Protection Program

1. Fill out the application. The application has been streamlined as part of a process designed to minimize red tape. The instructions on the back say it should take 8 minutes to complete—but don’t procrastinate on this one.

2. Pull together required information and documentation. The application requests are straightforward and include:

  • Identifying information for your business
  • Business tax id number (TIN)
  • Average monthly payroll and number of jobs your company supports
  • The intended use of the funds.

Clients of simplicityHR by ALTRES can use the PPP Loan Report generator in HR Symphony to pull everything they need in seconds.

3. Talk to your bank as soon as possible. The loans are being made available through existing Small Business Association (SBA) lenders, federally insured depositories and credit unions, and other approved financial institutions.

This page will be updated as more information becomes available.

Have a question for one of our HR experts? To learn more about this issue or to schedule a free consultation on the advantages of human resources outsourcing, contact simplicityHR.

This material is provided for informational purposes only. It is not intended to constitute legal advice, and reader should consult with their advisor or counsel before taking any actions based on the information contained within this material.

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