The past few months have been tough on small businesses across the country. Fortunately, the Paycheck Protection Program (PPP) under the CARES Act is still available along with some changes and more flexibility.
On Friday June 5, 2020 President Trump signed a bill that changes and improves the Paycheck Protection Program. The Paycheck Protection Program is a SBA (Small Business Administration) loan that helps businesses keep their workforce employed during the COVID-19 crisis. It was developed to incentivize small businesses that keep their workers on the payroll.
Back in March, the President signed the $2 trillion CARES (Coronavirus Aid, Relief, and Economic Security) Act. One significant provision of that bill was the Paycheck Protection Program.
Since its inception, the Paycheck Protection Program has suffered from many issues and confusing rules. Additionally, it has undergone much criticism. However, the Paycheck Protection Program Flexibility Act of 2020 also known as H.R. 7010 is a new bill that was recently approved by Senate and signed by President Trump. It helps alleviate and improve some of PPP’s issues.
Here are some of the big changes that have been made to the Paycheck Protection Program:
- The loan repayment period has been extended from 2 years to 5 years for any outstanding balance after forgiveness
- The covered period to use the loan and still qualify for forgiveness has been extended from 8 weeks to 24 weeks upon receipt of the proceeds of the loan (or until 12/31/2020, whichever comes first)
- Rather than 75%, employers are now only required to use 60% of the forgiven amount for payroll (to have the loan forgiven, 60% or more must be used for payroll)
- Therefore, the maximum portion of the loan used for non-payroll has been increased from 25% to 40%
- Employers now have more time to rehire or eliminate a reduction in employment, salary, or wage - period will be extended from June 30, 2020 to December 31, 2020
This legislation provides other forms of relief to businesses, however there are still some flaws. Therefore, it is important to educate yourself and know what you sign up for.
If you are interested in a loan, the Paycheck Protection Program is still accepting loan applications. Kabbage helps you access these critical funds through a simple, online application. Click here to apply.Apply for a PPP loan