On Wednesday evening, the Senate cleared changes to the popular Paycheck Protection Program that will allow small businesses more flexibility in using the rescue loan funds, and it was quickly signed into law by President Trump today. One of the key provisions in the new bill is that PPP borrowers will now have a longer time period to use the funds. In the original CARES Act, employers were limited to an 8-week period to use the funds. The new bill extends this period to 24 weeks.

The bill, which passed the House last week, has several key updates. Among the major improvements in the PPP:

1. The bill lowers the required spending on payroll for the PPP loans from 75% to 60%. That allows 40% of the loan to be spent on other expenses such as rent, mortgage or utilities.

2. The loan terms have been extended in the bill from two years to five years while continuing a 1% interest rate.

3. As mentioned above, the bill extends the loan spending period from eight weeks to 24 weeks, effectively extending the time needed to use the money from two months to six months. The bill allows companies to defer payroll taxes as well.

4. The early PPP provisions required businesses to rehire workers by June 30. The legislation pushes that back to Dec. 31.

5. The bill allows lenders to modify the terms of existing PPP loans to meet the new legislations language.

We will continue to send updates with more details. We are still waiting for guidance from the SBA on the original provisions of the Paycheck Protection Program. The SBA will need to revise the Forgiveness Application. Both the SBA and the IRS will need to issue guidance relating to the Paycheck Protection Flexibility Act.

Click here for detailed information on the Paycheck Protection Program. As always, reach out if you have any questions.