June 5, 2020 – Small business owners who took out a Paycheck Protection Program loan – or plan to apply for one – will now find it easier to qualify for forgiveness. The Paycheck Protection Plan Flexibility Act has been passed by Congress and signed today by President Trump.
Just to recap, the Paycheck Protection Program is intended to help small business owners hold onto employees. Originally, loans were fully forgivable if companies met specific requirements, including keeping all employees on the payroll for eight weeks.
As an advocate for your business, we wanted you to let you know that you have greater flexibility now. Of course, you’ll want to seek out guidance from your lending institution for your specific situation, but broad changes include:
Longer time period to use your funds: Originally, employers were given 8 weeks to use PPP funds. This has now been extended to 24 weeks. The longer timeframe benefits owners who are having trouble rehiring right now because some employees are making more money from unemployment payments.
Expanded options for spending: Originally, employers were required to spend 75% of their funds on retaining employees. Many owners felt they had other urgent expenses to take care of as well, including rent and utilities. Now only 60% of spending needs to be allocated to payroll.
Loan extension up to 5 years: Originally, PPP loans required repayment in 2 years at a 1% interest rate if the company didn’t qualify for full forgiveness. Now the loan period has been extended to 5 years.
We will keep you up to date with new details about this program and changes resulting from the Paycheck Protection Plan Flexibility Act. Check back with our COVID-19 resource center.
As an advocate who believes in your business, we’re sharing resources and guidance that could help you out right now. Because we know you want to do everything you can to save money, we’re also here for you with free quotes that could lower your rates on business insurance (or even improve your coverage). Ask a licensed Mylo agent to review your current policy and try to beat it.