Congress has passed the Paycheck Protection Program Flexibility Act of 2020, which makes significant changes to PPP. Please keep in mind these changes to the program when planning for your business.
Key changes to the program include:
- The forgiveness period is now 24 weeks (originally 8 weeks)
- The minimum amount that must be spent on payroll is now 60% (originally 75%). This means that you can spend up to 40% on non-payroll costs, such as rent, utilities and mortgage interest (1% interest on loan amount remaining after forgiveness)
- Loan terms are to be 5 years instead of 2 years
- You are now allowed a deferral of 2020 payroll taxes for PPP participants
- The period to rehire employees has been extended until December 31, 2020
Given the extension of the program and the deferral period for loan payments, we expect the forgiveness process to begin this fall. We are available to consult with you regarding the PPP program. If you require assistance, please reach out to your contact at KASH to discuss how the program changes impact your business.