The PPP Flexibility Act was signed into law on Friday.  Over the last few weeks we have covered many important components of the Bill, our latest article covers more of the salient points as well as the nuances that all borrower need to be aware of.  The topics in the article include:

  • The 60/40 Rule (Replacing the 75%/25% rule) appears to include a “cliff” effect, providing no forgiveness if you do not spend 60% of your proceeds on payroll.
  • New ways to be exempt from the FTE reduction calculation, including  if a borrower can document an inability to return to the same level of business activity as it was operating at before February 15, 2020, due to compliance with requirements or guidance issued by the CDC, OSHA or HHS during the period from March 1, 2020 to December 31, 2020.
  • Extension of the Covered Period – Important considerations borrowers should contemplate which may lead them to elect to keep an 8 week period as it is now otherwise automatically extended to 24 weeks.
  • Extension of loan maturity date – New terms for borrowers who received a loan after June 5th, however a potential window to extend maturity for borrowers who received loans prior to as well.

Reminder Section  (what should I be doing):

  • Call your Payroll Company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act – see previous emails.
  • Talk to your Payroll Company about the qualified sick/family leave legislation (FFCRA, passed prior to the CAREs Act) – see previous emails.
  • Consider speaking with your lender to discuss changes to terms of existing debt facilities.  The banking system remains strong.
  • If you have already received a PPP loan, start forecasting how you intend to spend the funds and how to qualify for the highest amount of forgiveness possible.

This information is provided by Withum. Visit Withum’s COVID-19 Resource Center for insights to help you and your business during this challenging time.