Question 1

What is the Paycheck Protection Program Flexibility Act?

Accepted Answer

On June 5, 2020, President Trump signed a new law, the Paycheck Protection Program Flexibility Act (PPPFA), providing greater accommodations for Americans that have taken or will be taking PPP loans. The Paycheck Protection Program (PPP) was ushered in under the CARES Act to be of particular assistance to small employers. Employers have been eligible for PPP loans if they employ less than 500 people and have been economically impacted by the pandemic. Congress passed the CARES Act, the Coronavirus Aid, Relief, and Economic Security Act, in late March 2020 to financially assist employers in light of the financial hit experienced during the pandemic. The legislation was the largest stimulus in national history.

Question 2

What are the eligibility requirements for PPP loan forgiveness?

Accepted Answer

Initially, employers had to spend seventy-five percent of the PPP loan money on paying employees in order to be eligible for loan forgiveness. The amended act requires employers to spend sixty percent of the received money on payroll, a fifteen percent drop creating flexibility for employers that allows more people to qualify. Additionally, up to forty percent of the loan may be spent on mortgage payments, rent, and utilities. The older version of the law required employers to spend the loan money within eight weeks in order to be eligible for loan forgiveness. The PPPFA allows the owners to spend the money over a twenty-four week period thereby extending the amount of time in which the money can be spent. However, borrowers can still apply for forgiveness after two months of loan receipt. In order to qualify for loan forgiveness, employers had to rehire an equivalent amount of full-time workers by the end of June. Some organizations expressed concern that this was not feasible. In New York City, for example, restaurants are not predicted to offer outdoor dining until July, making it unnecessary to be fully staffed. The changes allow the employers to qualify for forgiveness so long as they hire the same number of workers by the end of the year, giving employers more time to reacquire business. It also provides exceptions to the hiring requirements, including if the employer can show that they have suffered a loss of business compared to the business they received pre-pandemic.

Question 3

Do I qualify for PPP loan foregiveness?

Accepted Answer

Initially, employers had to spend seventy-five percent of the PPP loan money on paying employees in order to be eligible for loan forgiveness. The amended act requires employers to spend sixty percent of the received money on payroll, a fifteen percent drop creating flexibility for employers that allows more people to qualify. Additionally, up to forty percent of the loan may be spent on mortgage payments, rent, and utilities. The older version of the law required employers to spend the loan money within eight weeks in order to be eligible for loan forgiveness. The PPPFA allows the owners to spend the money over a twenty-four week period thereby extending the amount of time in which the money can be spent. However, borrowers can still apply for forgiveness after two months of loan receipt. In order to qualify for loan forgiveness, employers had to rehire an equivalent amount of full-time workers by the end of June. Some organizations expressed concern that this was not feasible. In New York City, for example, restaurants are not predicted to offer outdoor dining until July, making it unnecessary to be fully staffed. The changes allow the employers to qualify for forgiveness so long as they hire the same number of workers by the end of the year, giving employers more time to reacquire business. It also provides exceptions to the hiring requirements, including if the employer can show that they have suffered a loss of business compared to the business they received pre-pandemic.

Question 4

How long do I have to repay my PPP loan?

Accepted Answer

If PPP loans or portions of the loans are not eligible for forgiveness, recipients now have five years to repay that sum, as opposed to two years. Furthermore, the law has been adjusted so that employers whose loans are forgiven can still defer employer payroll taxes that go to Social Security, an option that was not available to them under the earlier version.

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