{"id":20355,"date":"2020-06-30T08:00:21","date_gmt":"2020-06-30T13:00:21","guid":{"rendered":"https:\/\/taxprocenter.proconnect.intuit.com\/?p=20355"},"modified":"2021-04-06T08:46:06","modified_gmt":"2021-04-06T13:46:06","slug":"ppp-flexibility-act-legislative-update-to-the-paycheck-protection-program","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/ppp-flexibility-act-legislative-update-to-the-paycheck-protection-program\/","title":{"rendered":"PPP Flexibility Act: Legislative update to the Paycheck Protection Program"},"content":{"rendered":"<p><em>This content is for the first stimulus relief package, The Coronavirus Aid, Relief and Economic Security Act (CARES Act), which was signed into law in March 2020. For information on the second stimulus relief package, the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, please visit the second post <a href=\"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/new-covid-19-relief-package-passed\/\"title=\"\"  target=\"_blank\" rel=\"false noopener\">here<\/a>.<\/em><\/p>\n<p>On June 5, 2020, President Trump signed into law the <a href=\"https:\/\/home.treasury.gov\/news\/press-releases\/sm1026\"title=\"\"  target=\"_blank\" rel=\"false noopener noreferrer\" data-wa-link=\"body_treasury-sm1026\" target=\"_blank\">Paycheck Protection Program (PPP) Flexibility Act of 2020<\/a>. This act made several key modifications to the PPP that was created under the <a href=\"https:\/\/accountants.intuit.com\/taxprocenter\/tag\/CARES-act\/\"title=\"\"  target=\"_blank\" rel=\"false noopener noreferrer\" data-wa-link=\"body_tpc-cares-cat\">Coronavirus Aid, Relief, and Economic Security (CARES) Act<\/a>. Here are the updates.<\/p>\n<p><strong>Forgiveness provisions<\/strong><\/p>\n<ul>\n<li>To be eligible for forgiveness, borrowers must spend at least 60% of the proceeds from the PPP loan on payroll costs. This is down from the previous 75% requirement. Partial loan forgiveness is available if borrowers do not meet the 60% threshold.<\/li>\n<li>Each borrower has a \u201cLoan Forgiveness Covered Period,\u201d which is the period of time during which a borrower must use the proceeds in order to maximize the loan forgiveness amount. For loans made on or after June 5, 2020, the Loan Forgiveness Period is 24 weeks. For loans made before June 5, 2020, the borrower can choose to use eight weeks or 24 weeks. Loans are considered \u201cmade\u201d on the date the SBA assigned a loan number to the borrower\u2019s PPP loan. The Loan Forgiveness Covered Period generally begins on the date the PPP funds are received (or if received on more than one date, the first date PPP funds were received) and must be end no later than Dec. 31, 2020. The previous timeframe was eight weeks.<\/li>\n<li>Another change is the new exemptions related to the workforce restoration. This new provision modifies the requirement of restoring the number of employees to the borrower\u2019s Feb. 15 levels. The amount of the loan eligible for forgiveness will not be reduced if:<\/li>\n<\/ul>\n<ol>\n<li style=\"list-style-type: none;\">\n<ol>\n<li>The borrower is able to document that (a) the business was unable to rehire the employees employed on Feb. 15 due and (b) the borrower was unable to hire anyone similarly qualified or unfilled positions by Dec. 31; or<\/li>\n<li>The borrower is able to document that the business has been unable to return to the Feb. 15 level of business activity due to certain COVID-19 related restrictions.<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<p>In states that are still under COVID-19 restrictions, the second provision could become an alternative for those businesses to avoid reductions in forgiveness under this program.<\/p>\n<p>Also, in the event a borrower is unable to achieve full forgiveness on the PPP loan, two modifications were made:<\/p>\n<ul>\n<li>For PPP loans made on or after June 5, the minimum loan maturity period changed from two years to five years, but is still at a 1% interest rate. For loans made before June 5, 2020, the borrower and lender may agree to extend the maturity period from two to five years.<\/li>\n<li>Deferral of PPP loan repayments has been modified. Borrowers who apply for forgiveness within 10 months after the last day of the 24-week forgiveness covered period can defer principal and interest payments until SBA pays the forgiveness amount to the lender or notifies the lender that the borrower is ineligible for forgiveness. Borrowers who do not apply for forgiveness must begin making payments 10 months after the earlier of the end of the last day of the 24-week covered period or Dec. 31, 2020.<\/li>\n<\/ul>\n<p>One last modification is related to the <a href=\"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/cares-act-allows-employers-to-defer-employer-portion-of-social-security-payroll-taxes\/\"title=\"\"  target=\"_blank\" rel=\"false noopener noreferrer\" data-wa-link=\"body_tpc-payrolldeferral\">deferral of payroll tax payments<\/a>. Previously, those who received forgiveness on a PPP loan were not able to take advantage of this CARES Act provision; now, they may be eligible for deferral.<\/p>\n<p>No extensions were provided for submitting an application to apply for a PPP loan, so potential borrowers have until June 30 to apply.<\/p>\n<p><strong>Points of advice<\/strong><\/p>\n<p>While this PPP Flexibility Act provides much more latitude on the eligibility for PPP loan forgiveness, it\u2019s still a good idea to make sure your clients have documentation in order related to these loans. In reviewing the application process by the banks to grant PPP loans, it can be surmised the processing of the lengthy forgiveness application will require greater substantiation. Further, even if PPP loans are forgiven, in whole or in part, if certain requirements are met, it would not preclude the potential for inspections and audits years down the road.<\/p>\n<p>Significant guidance from the accounting industry includes setting up separate banks accounts for these funds, as well as increased recordkeeping for payroll expenses and non-payroll expenses. Remember that the use of these funds is restricted for non-payroll related expenses. Maintaining records on mortgage interest, rents, and utilities these funds are spent on is highly suggested.<\/p>\n<p>If your clients\u2019 records aren\u2019t always in good shape, this is a good time you reach out and advise them to get them in order \u2013 they are looking to you for advice and guidance.<\/p>\n<p>&nbsp;<\/p>\n<h6>Note: The Paycheck Protection Program Flexibility Act (\u201cPPP Flex Act\u201d) was signed into law on June 5, 2020. The PPP Flex Act extends the availability of loans under the Paycheck Protection Program (PPP) and adjusts certain rules applicable to PPP loans. The information reflected here may therefore be outdated. We are working to update our resources to reflect these updates to the PPP, so be sure to check back soon. Please refer to the latest guidance from the <a href=\"https:\/\/www.sba.gov\/funding-programs\/loans\/coronavirus-relief-options\/paycheck-protection-program\" target=\"_blank\">SBA<\/a> and <a href=\"https:\/\/home.treasury.gov\/policy-issues\/cares\/assistance-for-small-businesses\" target=\"_blank\">Treasury<\/a> to confirm current program rules and how they apply to your particular situation.<\/h6>\n<h6>PPP borrowers may engage the services of an accountant to track the use of their PPP funds. However, only the borrower or an authorized representative who is legally authorized to make certifications on the borrower\u2019s behalf may submit an application for loan forgiveness. Accountants should be aware of this limitation and ensure that an authorized representative of the borrower understands his or her obligation to complete, review, and certify to the contents of any loan forgiveness application.<\/h6>\n<h6>The funding described is made available to businesses located in the United States of America and are not available in other locations.<\/h6>\n<h6>This content is for information purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer\u2019s particular situation. Intuit Inc. does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.<\/h6>\n<h6>We provide third-party links as a convenience and for informational purposes only. Intuit does not endorse or approve these products and services, or the opinions of these corporations or organizations or individuals. Intuit accepts no responsibility for the accuracy, legality, or content on these sites.<\/h6>\n","protected":false},"excerpt":{"rendered":"<p>Learn how the PPP Flexibility Act made several adjustments to the Paycheck Protection Program created under the CARES Act.<\/p>\n","protected":false},"author":144648969,"featured_media":1430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rkv_browse_by_id":0,"rkv_cta_id":0,"rkv_optimize_for_pagespeed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"useModifiedDate":false,"customPublishDate":"","_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"categories":[509474089],"tags":[646041759,646041810],"intuit_collection":[],"intuit_series":[],"coauthors":[646041753],"class_list":["post-20355","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tax-law-and-news","tag-cares-act","tag-covid-19"],"header_image":"","yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.3 (Yoast SEO v27.6) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>PPP Flexibility Act of 2020<\/title>\n<meta name=\"description\" content=\"The 2020 PPP Flexibility Act cut the payroll spending threshold from 75% to 60%, extended the covered period, and allowed partial forgiveness. 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