It has been a wild ride keeping pace with all the updates that have been made to the CARES Act since its inception.
Today, we want to take some time to highlight the recent updates that have been made to the Paycheck Protection portion of the act.
On June 5th, the Paycheck Protection Program Flexibility Act was signed into law.
As the name suggests, this new act provides much more flexibility for borrowers who have received funds from PPP or are looking to apply for funds from the program.
There are four main areas that have been impacted by the act.
- Forgiveness Eligibility Period
- Payroll Expense Allocation
- Repayment Period
- Extended Application Period
1) Forgiveness Eligibility Period:
Previously, borrowers had 8 weeks from the day of receiving funds to use them.
Under the updated Paycheck Protection Flexibility Act the time period to use these funds has been extended to 24 weeks.
2) Payroll Expense Allocation:
Previously, borrowers were required to allocate 75% of their funds towards payroll expenses in order to be eligible for full forgiveness of their loan.
Under the updated act, borrowers only need to allocate 60% of funds towards payroll expenses to be eligible for forgiveness.
3) Repayment Period:
Previously, any unforgiven portion of the loan had to be paid back within 2 years.
Under the updated act, the payback period has been extended to 5 years for loans that were made on June 5th or later.
For loans made prior to June 5th, the borrower can work with their lender to extend the repayment period.
4) Extended Application Period
There’s still time left! There are still funds left in the program to be distributed to applicants.
That means that if you have not yet applied for your business to receive funds, you have until June 30 to submit your application and receive approval.
Our team is continuing to monitor the information that is coming out regarding the CARES Act and other business relief initiatives and will provide updates as solid information becomes available.
If you have any questions, please feel free to contact me directly at [email protected] or by phone at 985.727.0770.