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The Latest Paycheck Protection Program Update
July 30, 2020
PPP-update

The Latest Paycheck Protection Program Update

Most likely, your business has been financially affected in some way due to COVID-19. Luckily, the Paycheck Protection Program Flexibility Act was signed into law on June 5th, providing financial assistance to small business owners during this time.

The forgivable loan program is intended to provide accessible financing to small businesses affected by COVID-19. Below, we’ll review the latest changes that have been made to the program, so that you’re prepared to apply for the Paycheck Protection Program (PPP).

What Your Business Should Know About Recent PPP Changes:

1. Extended Application Deadline

Previously, the PPP application expired on June 30th. However, on July 6th, the SBA resumed application review, and announced a new application deadline. Currently, the PPP loan application deadline is August 8th.

2. Extended Usage Timeline and Improved Flexibility

Now, business owners can extend the length of time in which they can utilize the loan until December 31st, which provides more flexibility on how they can spend it.

Most notably, it’s no longer required that employers spend at least 75 percent of their loan on payroll costs. Instead, the most recent bill now states that business owners must spend 60 percent on payroll costs, and the rest can be used for other approved usages. In addition, the expense ratio forgiveness is 75:25.

3. Extended Repayment Period for Future Borrowers

Thus far, 4.5 million small businesses have received a PPP loan, and reports claim that there’s still more than $100 billion available. With the latest update, future recipients can now extend their repayment period from two years to five years. However, business owners that have already received their PPP loan won’t receive an extension.

4. Eliminated Headcount Rule

Because the COVID-19 pandemic continues, business owners in many states are required to follow strict capacity rules. Due to this, PPP recipients no longer must maintain their pre-crisis head counts.

5. Revised Loan Forgiveness Schedule

Now, recipients have 10 months from the last day of the covered period to apply for loan forgiveness. In addition, the forgiveness period for expenses has been expanded to 24 weeks or until the end of the year (whichever occurs first). At this time, money that’s spent in eight weeks from the loan disbursement date is eligible for loan forgiveness.

For more information on PPP loan forgiveness, click here.

6. Ability to Defer Payroll Taxes

With the latest PPP funds update, employers can now defer a portion of their payroll taxes, which previously wasn’t allowed.

Conclusion

As business owners work to adapt to their new normal, it’s crucial to have additional financing at their fingertips. Remember, the PPP loan is distributed on a first come, first serve basis, and the deadline is once again approaching.

In addition, if the PPP loan isn’t right for your business, you may benefit from an Economic Injury Disaster Loan (EIDL). Or, apply for alternative financing to support your business’s future. Click here to learn more about how Fora Financial can help.

As always, we’ll provide any updates to the deadline, requirements, and stipulations as they’re made available. Good luck!

Editor’s Note: This post was updated for accuracy and comprehensiveness in July 2020.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].