• The covered period in which the loan funds must be spent to qualify for forgiveness was changed from 8-weeks to 24-weeks.
• If you received your loan before June 5^th, you have the option to choose between the 8-week and 24-week covered periods.

• The payroll cost requirement to qualify for maximum forgiveness was reduced from 75% of the total loan amount to 60%.
• If payroll is less than 60%, forgiveness will be reduced, but will not be completely diminished.
• You can spend more than 60% of your loan amount on payroll.

• The amount of loan forgiveness will not be reduced due to loss of employees if the borrower can document the inability to hire or rehire new employees because of the business’s inability to return to its pre-February 15^th operating levels due to compliance of CDC, OSHA or HHS regulations. The SBA has clarified that if your local government ordered closures of businesses due to these guidelines, you would qualify for this exception. Keep documentation of any orders or guidelines that you are relying on for this safe harbor.
• If you have reduced your headcount during the pandemic, you have the opportunity to restore your headcount without penalty by hiring back your workforce by December 31^st, 2020. This rehire safe harbor (called “safe harbor 2” on the regular forgiveness form) is only applicable if there was a reduction of FTE between February 15^th and April 26^th, 2020. If you did not reduce headcount between those dates, the “rehire/restore by December 31st” safe harbor will not apply.
• The employer will not be penalized for reductions for positions in which the employer made a good-faith, written offer to rehire an employee and which was then rejected by the employee. Businesses have been finding this difficult to document, as employers are required to report rejected employment offers to the Department of Labor, possibly impacting the employee’s unemployment payments. Employees are therefore not inclined to respond in writing.

• Employers, even those who obtain forgiveness of a PPP loan, may defer their 2020 employer payroll taxes. 50% of the total due would need to be paid by the end of 2021, and the balance at the end of 2022.
• You do not have to wait until December 31^st to apply for forgiveness. You can apply as soon as you have spent your loan proceeds on forgivable costs, even before your covered period is over.
• Because of the extension to 24-weeks, those who are self-employed may now receive full forgiveness for up to $20,833 (rather than the 8-week limit of $15,385). The forgivable compensation limit is calculated as the 2.5-month equivalent of $100,000 per year ($20,833) or 2.5/12 (20.83%) of their 2019 Schedule C net income. This is per individual across all businesses.
• For non-owner employees, the forgivable compensation limit is $46,154 for the 24-week covered period, and $15,385 for the 8-week covered period.
• Note that you cannot apply for additional PPP funds due to the extension; it is just an extension of time in which you can spend it and receive forgiveness.

• self-employed with no employees; OR
• did not reduce the salaries or wages of employees by more than 25% and did not reduce the number or hours of employees; OR
• experienced reductions in business activity as a result of federal health directives related to COVID-19, and did not reduce the salaries or wages of employees by more than 25% of those of the first quarter of 2019.

• If you can spend the funds on forgivable costs sooner than later, you can get the PPP loan over with and get on with your business. You can apply for forgiveness as soon as you are ready.
• You can take advantage of the safe harbor of reduction of business due to COVID-19 health guidance which will become harder to receive as cities move through their reopening phases.
• Predictability. We never know what kind of regulations the SBA is going to come out with.
• You can get the loan off your books. Borrowers who may need to maintain lines of credit or get subsequent loans will be impeded to the extent that lenders are concerned with the unclarity of how much forgiveness will be received. Until the forgiveness application has been approved by the bank and then by the SBA, the borrower cannot be sure that the loan will be forgiven.
• You want to avoid tax complications. If you do not receive a forgiveness decision before you file your 2020 return, you may run into issues regarding business expenses, which cannot be deducted if those same expenses are later forgiven.

• The amount of EIDL Advance Grant (the portion that doesn’t have to be paid back) will be reduced from your PPP forgiveness.
• If you received a PPP loan (whether or not it was forgiven), you are no longer eligible for the employee retention credit.

• Interest rates are 2.75% for nonprofits and 3.75% for businesses, with a maximum term of 30 years.
• Loans over $200,000 must be guaranteed by an owner with at least 20% interest in the company. We expect this requirement to be waived for schools.
• You can apply for this loan directly on SBA.gov. It is a simple form that can be completed in under 15 minutes.

• Eligible businesses can request an advanced grant of up to $10,000, calculated at $1,000 per employee.
• This grant does not need to be paid back, even if your organization is denied the EIDL loan.
• You do not need to accept the loan to receive the grant.
• If you get an EIDL grant, and later apply for a PPP loan, the EIDL grant will be subtracted from the amount that gets forgiven.

• independent contractors (for whom there is expanded eligibility criteria)
• freelancers
• sole proprietorships, with or without employees
• gig workers
• agricultural businesses

• are self-employed and have no employees; OR
• did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
• experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.

On, June 5th, 2020, President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA) into law, which gives small businesses more flexibility in how they spend federal loans provided by the Paycheck Protection Program.

Under the act, the following changes were made:

• The covered period to spend the loan proceeds was extended from 8 weeks to 24 weeks. Note: the loan amount will remain the same, borrowers just have more time to spend it and receive forgiveness. Businesses who received a loan prior to June 5, can still elect to use an 8 week period.
• Only 60% of the loan amount must be allocated to payroll costs, instead of the previous 75%. The current language indicates that the 60% is now ‘all or nothing’. In other words, if 60% of payroll costs is not reached within the allowed 24 weeks, there will be zero forgiveness. There are legislators who have asked the SBA to not include this in the regulation.
• The safe harbor to rehire employees in order to maintain FTE numbers was moved from June 30 to December 31. In addition, the amount of loan forgiveness will not be reduced due to loss of employees if the borrower can document the inability to hire or rehire new employees, due to the business’s inability to return to its pre-February 15 operating levels due to compliance of various regulations.
• Employers who obtain forgiveness of a PPP loan may now defer all Employer Social Security tax deposits that would otherwise be required to be deposited before January 1, 2021.
• The amount which is not forgiven can also be extended from a 2-year loan to up to 5 years.

There are many questions which remain unanswered with the passage of this new law. We are awaiting guidance from the SBA and will continue to keep you updated as information becomes available.

This material has been prepared for informational purposes only, and is not intended to provide, nor should it be relied upon for, legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.