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How the PPP Flexibility Act Affects Businesses
On June 3, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) was approved by the Senate. The PPPFA impacts 4.4 million Paycheck Protection Program (PPP) borrowers, aiming to reduce the complexity around loan forgiveness. In this article, we’ll discuss what the PPPFA is and how it affects businesses that have PPP loans.
Update June 17, 2020: The Small Business Administration (SBA) released revised versions of the Paycheck Protection Program Loan Forgiveness Application (SBA Form 3508) and its instructions. These forms were updated in accordance with the provisions of the PPPFA. The SBA also released a simplified version of Form 3508, SBA Form 3508EZ, and corresponding instructions on how it may be used.
Update July 2, 2020: The Paycheck Protection Program Extension Act (PPPEA) has been passed, extending the time small businesses have to file a PPP loan application to August 8, 2020. Once President Trump signs the PPPEA, the Small Business Administration (SBA) will announce a date and time that the program will reopen to receive loan applications.
What is the PPP Flexibility Act?
The PPP Flexibility Act provides borrowers greater flexibility around Payroll Protection Program loan forgiveness qualifications, amounts, and time periods. It also eases the rules around how small businesses can use loan funds. The changes outlined in this act ensure more borrowers will have most or all of their loans forgiven.
How Does the PPP Flexibility Act Affect Businesses?
The following are the major components of the PPP Flexibility Act and what they mean for businesses that have taken out forgiveness loans:
1. Forgiveness Period Expanded
The SBA cannot continue accepting PPP loan applications after June 30, 2020. Businesses that are still planning to submit a PPP loan application have until the current June 30, 2020 deadline to submit.
2. Period Extended for Measuring Full-Time Employees
3. Employee Availability and Social Distancing Requirements
- When the borrower cannot find qualified employees for unfilled positions. This may apply when a borrower has a difficult time finding employees due to COVID-19 risks or requires a specific skill set.
- When the borrower cannot restore operations to relative levels of business activity due to social distancing, sanitation requirements, or customer safety needs. These requirements must be established by the Centers for Disease Control (CDC), Secretary of Health and Human Services, or the Occupational Safety and Health Administration (OSHA) during the period between March 1, 2020, and December 31, 2020.
4. Lowered Payroll Costs Percentage
5. Employer Payroll Tax Deferrals
6. Maturity Date and Deferment Period Extended
How APS Can Help
- FFCRA Income Types: These income types simplify the tracking of qualified sick payments under the FFCRA and make it easier to manage employee paid sick leave.
- FFCRA Sick Pay Dashboard: This dashboard displays important FFCRA information, including the number of employees paid, the total amount paid, and the amount of credit taken.
- PPP Loan Forgiveness Report: This report provides detailed information that may be used to validate eligibility for PPP loan forgiveness, including each employee who was on the payroll during the period and what was paid to them.
- FFCRA Tax Credit Report: This report provides information on the utilization of the FFCRA tax credit for compliance purposes.
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