In early June 2020, the Small Business Administration’s Paycheck Protection Program (PPP) Flexibility Act was signed into law. The PPP program was created to provide much-needed relief to small businesses who want to keep their workers on payroll as the companies work through the economic difficulties caused by COVID-19.
Because the program was rolled out quickly, several updates have been made since its initial launch. The PPP Flexibility Act is one such update, which is aimed at making forgiveness easier and opens the possibility of full forgiveness for many businesses.
In this video, Scott Morris, Vice President of Commercial Loans at Gateway Bank, walks you through all you need to know about how this new legislation affects your business, including the worksheets and forms needed to calculate and apply for forgiveness:
Here are some of the main changes the PPP Flexibility Act put in place:
- The period to use PPP funds for forgivable purposes has been extended from 8 weeks to 24 weeks.
- The loan repayment period has been extended from 2 years to 5 years, and the 1% interest rate remains.
- The payroll spend requirement decreased from 75% to 60%.
- The “rehire” of employee count has been extended to December 31, 2020.
- The covered period can start on the date you received your PPP loan or the first day of the first pay period after you received your PPP loan.
- The forgiveness amount continues to be reduced if you’ve reduced the number of full-time employees as compared to prior periods, or compensation across employees earning $100,000 or less was reduced by more than 25%.
- Businesses can defer the employer portion of Social Security taxes for the 2020 tax year until 2021 (50% due) and 2022 (remaining 50% due).
How to apply for PPP forgiveness
All customers participating in the PPP must submit an application to Gateway Bank for review, which you can access here. While we must complete our review of these applications within 60 days, our goal is to finish this process much faster.
We will submit the applications to the SBA, who then has 90 days to approve the request and pay down the balance on the loan. We will let you know once we have reviewed your file and sent it to the SBA. We encourage you to watch the video above in order to make the application process as fast and smooth as possible.
You’re not alone
Stressful economic circumstances, new forms, paperwork, and payroll calculations can all feel overwhelming. We’re your partner throughout this entire process, and we’re here to provide support through every stage. Contact us anytime for questions and assistance.