When COVID-19 started to ravage the economy, Congress stepped in to help. The quick action was warranted, but it left little time for thorough review. Signed into law on June 5, the Payment Protection Program Flexibility Act (PPPFA) amended many of the program missteps that time revealed.
What are the biggest changes for loan recipients?
Initially, loan recipients were required to spend all the money in just eight weeks. Under the PPPFA, they now have 24 weeks from the loan date or until Dec. 31, whichever comes first.
How funds can be spent has also been altered. The required amount spent on payroll decreased from 75 percent to 60 percent. This allows loan recipients to use more of the money on mortgage interest payments, rent, and utilities and still have the loan forgiven.
The PPPFA also adjusted the loan maturity timeline, but only for loans issued after June 5. Loans issued before June 5, have to be repaid in two years, while those issued after June 5, when the Flexibility Act was passed, have to be repaid in five years.
Business owners who have not secured a PPP loan still have time to apply. As of June 17, there was $100 billion available. Small businesses and farms have until June 30 to submit an application. Click here to learn more about the application process.