PPP Flexibility Act Information

Timeframe:

You now have 24 weeks to spend all the money instead of 8. After spending it all, you can then submit the forgiveness request anytime between June 30 and December 31, 2020.

75%/25%:

The rules regarding the amount required for payroll cost has changed from 75% to 60% and for other costs from 25% to 40%. Many of our customers have not been able to return employees to the payroll yet, so the extended time and lower percentage will be a big help.

Employees:

You now have until December 31, 2020 to bring your employment headcount back up to the level it was prior to February 15, 2020. Also, a prior rule change announced that you will not be held accountable for any employees that you fired for cause or offered to return to work and they declined. Just keep evidence of the good-faith offer to return and you’ll be fine. ONE IMPORTANT THING: there is no reason to hurry to submit your forgiveness request until you’ve had time to bring your employee headcount back up. Wait until you are able to meet that condition.

Repayment:

If you closed your loan before June 5, 2020, you are still under a 2-year repayment term; however, loans closed after June 5, 2020 get a 5-year repayment term on any balance that remains unforgiven. The rate remains 1%.

Payroll Documents:

Hopefully the extended period to 24 weeks will make it easier for you to spend all the PPP loan proceeds on payroll expenses. Remember the limitation of $100,000 wage earners are capped at $15,384.62 in pay from PPP funds. If you have already met your maximum on certain employees, you can still use the remaining funds to pay other employees until the money is all gone. Documents required will be payroll reports (i.e. either payroll statements, paystubs, payroll tax filings reported i.e. Form 941, a spreadsheet with names and amounts, etc.) and evidence of payment (i.e. cancelled checks, bank statements showing the money came from PPP proceeds, etc.). Also, evidence of all insurance and benefit payments (invoices and evidence of payment). You can get a head-start by scanning these together as PDF files and save them in a folder called “Payroll Documents”. It would be helpful if you could create a spreadsheet with the total amount on the front and then provide the documentation to support that amount behind it.

Headcount:

The original instructions said to count all employees, whether full or part-time in your total. Be consistent with the methodology of how you calculated eligible employees at application to headcount at the end.

Expenses:

Be sure to keep accurate records of any expense you paid. Scan all similar bills together with evidence of payment (i.e., scan all power bills together with evidence of each payment). Save them as a PDF in a folder called “Utilities – Power.” The SBA has defined eligible business expenses as “business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.”

Lease or Interest:

This will be the hardest to document because we will have to provide the lease or loan documents as support. If you have to, print out the front page and only the section that lists the monthly rent payment or the loan’s interest rate and balance. Then give us the details on how you calculated the forgiveness portion. Hopefully the extended timeframe may make it easier for you to spend all the money on payroll and you can avoid the hassle this use of funds may cause.

EIDL Advance:

If you applied and received an EIDL emergency advance (up to the $10,000 in “free money”), you must deduct that balance from your PPP forgiveness amount – If you used the EIDL emergency advance for the same purpose as the PPP loan, meaning you co-mingled the money to make payroll. If you used the money for other costs, you will repay that loan over the 30-year term as outlined.