Late Wednesday evening, the Senate passed the Paycheck Protection Program Flexibility Act. The Act, which passed the House of Representatives last week, is being sent to the President for final approval.

          The Act gives business owners more “flexibility” and a longer time to use the Program’s funding and still qualify for loan-forgiveness from the CARES Act’s Paycheck Protection Program.

Here are some of the changes:

  • Extending the eight-week covered period in which borrowers must use the Program’s funding to qualify for loan-forgiveness to 24 weeks after the date of origination.
  • Changing the 75%-25% ratio, which requires borrowers to allocate 75 percent of the Program’s funding on payroll and 25 percent on other fixed costs such as rent and utilities to at least 60 percent for payroll costs and up to 40 percent for other fixed costs.
  • The employee rehiring period has extended from June 30, 2020, to December 31, 2020, giving borrowers an additional 6 months to rehire employees or restore payroll levels without incurring any reduction in the forgiven amount.
  • It is important to note, there is an exemption in the eligibility for loan forgiveness for borrowers unable to rehire an employee if the business is unable to return to the same level due to compliance with social distancing guidelines or an inability to hire similarly qualified employees with documentation of the aforementioned.
  • The Program’s exception of the delay of payment of employer payroll taxes where a borrower did not qualify for deferral if they received Program funding has been stricken. This allows a deferral of employer payroll taxes until December 31, 2020 with 50 percent due December 31, 2021 and the remaining 50 percent due on December 31, 2022.
  • If a borrower fails to apply for forgiveness within 10 months after the last day of the covered period, the borrower will make payments of principal, interest, and fees on the Program starting on the day that is not earlier than the date that is 10 months after the last day of the covered period.
  • A minimum maturity of 5 years. The interest rate remains 1 percent.

We have been closely monitoring the CARES Act and its guidance as it is modified and will continue to keep you updated. If you have questions concerning the Program, one of our attorneys can assist you. Please do not hesitate to contact the Wladis Law Firm. We will do our best to provide you with updates and will be available to answer questions as circumstances change. We may be reached at (315) 445-1700 or by e-mailing your everyday firm contacts.