Legislation: U.S and Canada COVID-19 – Legislation Guidelines

Paycheck Protection Program Flexibility Act
(PPPFA): The New and Improved PPP –
Effective June 5, 2020

The CARES Act Paycheck Protection Program (PPP) has been modified by language signed
into law last week.

This bill will make huge changes (mostly positive) surrounding how to plan and turn your
PPP loan into a 100% grant. The Small Business Administration (SBA) will be issuing more
guidance around this, and your bank should be able to walk you through the forgiveness
application.

Here are the key changes:

1. The “covered period” for forgiveness is now 24 weeks from funding, no later than
   December 31, 2020. ***Previously, it was 8 weeks and June 30, 2020.
2. EXEMPTION BASED ON EMPLOYEE AVAILABILITY….. shall be determined without
   regard to a proportional reduction in the number of full-time equivalent employees
   if an eligible recipient, in good faith, is able to document:
   1. An inability to rehire individuals who were employees as of Feb 15, 2020.
   2. An inability to hire similar employees for unfilled positions as of Dec 31, 2020.
3. LIMITATION ON FORGIVENESS – This has been changed to require loan usage as
   follows: 60% used on payroll costs /40% used on non-payroll costs. This means that
   if you don’t use at least 60% of the loan on payroll, the loan will not qualify for
   forgiveness.
4. If you fail to apply for forgiveness by 10 months after your loan’s forgiveness period,
   you will have to repay the loan, fees, and interest.
5. The term of the PPP loan will now be a minimum of 5 years. ***Previously, it was a 2-
   year term.
6. Payments on a PPP loan are deferred until the SBA funds your allowable forgiveness
   to your lender.
7. If you have a loan funded before this bill was signed, you may also stay with the
   current 8-week funding and 75%/25% forgiveness guidance.

Expect further specific guidance from your banker in the near future.