The Paycheck Protection Program (PPP) was created to provide business owners in the United States with some relief as they confronted the hardships that COVID-19 brought upon them. This allowed them to continue paying their employees and keep their business afloat while they were temporarily closed. While it was meant to be helpful, small business owners began to realize the aid had limits. In response to their concerns, the House approved the Paycheck Protection Program Flexibility Act (PPPFA) on May 27, 2020, so that it could be passed by the Senate on June 3. Following this, President Trump signed it into law on June 5, 2020. To learn more, continue reading below and contact an experienced New York business law attorney.
What is New About PPPFA?
PPP required business owners to spend 75% of the loan they received on payroll. Different than this, PPPFA now requires business owners to only spend 60% of the loan on their payroll. In addition to this, business owners who received PPP loans had to spend their loan within eight weeks of receiving it, while PPPFA extended this to 24 weeks. This allows business owners more time to spend their loans as it fits their business for the remainder of the year. PPPFA also gives small business owners until the last day of the year, December 31, to rehire their employees, from the initial date of June 30, which allows their salaries to count towards forgiveness.
Under PPPFA, small business owners are able to receive loan forgiveness if they can prove they are unable to hire a previous employee on or before February 15, 2020, if they cannot hire a similarly qualified employee on or before December 31, 2020, or they cannot resume the same caliber of business activity that they had before February 15, 2020. The new law also extends the amount of time that business owners have to repay their loans from two to five years if certain portions of their loans are not forgiven.
Dealing with these matters can often be overwhelming. Running a business is not easy, and the importance of your business is a priority to us. It is because of this that, if you have any questions about how PPPFA may benefit your small business, do not hesitate to contact Zimmet Law Group, P.C. today.
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