Treasury and SBA Statement on PPP Flexibility Act
The Treasury issued a statement clarifying some points of the PPP Flexibility Act
For the full text of the statement, click here. The statement mostly reiterates the details of the new law but also includes two important clarifications: 1) 60% Requirement for Forgiveness a) In order to qualify for full forgiveness, the original bill states that borrowers must use at least 60% of their PPP funds on payroll costs. It also states that if a borrower did not use 60% of the funds on payroll costs, none of the loan would be forgiven. UPDATE: Yesterday's statement clarifies that if a borrower uses less than 60% of the loan on payroll costs, they will continue to be eligible for partial loan forgiveness. 2) 5-Year Payback Period Eligibility a) The original bill states that borrowers will have 5 years to repay any loan proceeds that are not forgiven. UPDATE: Yesterday's statement notes that only loans approved ON or AFTER June 5, 2020 can be paid back in 5 years instead of 2 years. Banks are permitted to extend the 5-year loan period to borrowers whose loans were approved prior to June 5th, but are not required to do so. A few other key points from the statement are: 1) The final date on which a PPP loan application can be approved is June 30, 2020. 2) The SBA and Treasury will be issuing further rules and guidance, a modified borrower application, and a modified loan forgiveness application promptly. As new rules and guidance are issued and when the updated forgiveness application is released, Easytrack will continue to share this information. Please don't hesitate to contact us.
The Easytrack Payroll Team