On June 5th, the Paycheck Protection Program Flexibility Act became law. The Act makes it easier for recipients of the PPP loans to qualify for forgiveness. Here are the highlights of the changes:
- More time to spend the loan proceeds. The “covered period” is now 24 weeks from the date of the loan or December 31st which ever is earlier. You can also opt to continue to use the 8 weeks.
- There is a reduction in the amount that needs to go to payroll cost from 75% down to 60%. That means that the other 40% can be spent on other qualifying expenses such as rent and utilities.
- The repayment time period for the unforgiven portion of the loan is now 5 years instead of two years and the interest rate remains at 1%.