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Important Changes to the Paycheck Protection Program

 The Paycheck Protection Flexibly Act of 2020 provides adjustments to the original loan program, and extends the timeframe for PPP loan recipients to spend the money and qualify for forgiveness. The full piece of legislation can be found HERE.

The highlights of the bill are:

·     An extension of the 8-week “covered period” to calculate loan forgiveness to 24 weeks or the end of the year, whichever comes first, for new PPP loans.

·     Current PPP borrowers can elect to extend the 8-week “covered period” to 24 weeks or the end of the year.

·     The deadline to restore employment/wage levels required to avoid reductions in forgiveness are extended by the 24 week period but must be done by December 31, 2020.

·     Additional exceptions to loan forgiveness reductions for inability to find qualified workers or to restore business activity levels.

·     Extension of the repayment period to as long as 5 years (instead of 2).

·     Loan recipients will be eligible for forgiveness if 60% of the loan is spent on payroll, rather than 75% as in the previous iteration of the PPP, however, if the 60% threshold is not met, none of the loan is eligible for forgiveness.

·     Ability to defer payment of employer payroll taxes that was previously prohibited under Section 2302 of the CARES Act relating to employers with PPP loan forgiveness.

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