PPP Update: Congress Passes PPP Bill Providing Flexibility to Borrowers

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On June 5, 2020, President Trump signed into law the Paycheck Protection Program Flexibility Act of 2020 (the Flexibility Act), which made some key changes to the Paycheck Protection Program (PPP) created by the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). Among other things, the Flexibility Act alleviates restrictions for PPP loan recipients by reducing the threshold amount that borrowers must spend on payroll costs, as well as extends the previous eight week timeframe in which borrowers had to spend their loans to be eligible for forgiveness. The key changes that the Flexibility Act makes to the PPP are detailed below. Further details about the impact of the Flexibility Act on the ability to defer payroll taxes can be found here.

It is important to note that it appears from the text of the Flexibility Act that an existing PPP borrower that opts in to the 24 week covered period would have to retain FTE employee levels and salary levels during the new extended 24 week period instead of the previous eight week period, while their PPP loan amount would not be increased from the current amount of 2.5x their average payroll costs.  Existing PPP borrowers should take this into account when determining whether or not to opt in to the new 24 week covered period.

The PPP has been quickly and frequently evolving since the date the CARES Act was enacted.  PPP borrowers should regularly review the current SBA guidance to stay informed of all changes.  If you have any questions about the PPP or this latest guidance, please call Drew Parobek, Marty Gates, Cauley Simmons, or your Vorys attorney today.


Vorys COVID-19 Task Force

Vorys attorneys and professionals are counseling our clients in the myriad issues related to the coronavirus (COVID-19) outbreak.  We have also established a comprehensive Coronavirus Task Force, which includes attorneys with deep experience in the niche disciplines that we have been and expect to continue receiving questions regarding coronavirus. Learn more and see the latest updates from the task force at vorys.com/coronavirus