Payroll Protection Program Flexibility Act Amends the Paycheck Protection Program Loan; Does It Help Your Wisconsin Business?

Update: The deadline to apply for a Paycheck Protection Program (PPP) loan has been extended to August 8, 2020.
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On June 5, 2020, the U.S. federal government enacted the Payroll Protection Program Flexibility Act (PPPFA) to amend the existing Paycheck Protection Program (PPP). The PPP offers forgivable loans for small businesses to assist with payroll and other costs during the COVID-19 pandemic.

The PPPFA made several significant changes which provide small businesses additional flexibility in using their PPP loan funds.

What changes were made to the PPP under the new PPPFA?

  • The covered period of the PPP loan has been extended from eight weeks to 24 four weeks from when the loan was received.
  • There is a change in the way businesses can allocate their PPP funds. Initially, at least 75% of loan funds needed to be spent on payroll costs with 25% or less spent on non-payroll costs (mortgage interest, rent, and utilities) in order for the borrower to receive full forgiveness. The PPPFA amended that to at least 60% must be spent on payroll costs and no more than 40% on non-payroll costs.
  • Another major change has to do with when borrowers must re-hire laid-off employees in order to receive full forgiveness. Under the CARES Act and the original PPP, borrowers had until June 30, 2020, to re-hire employees. The PPPFA amended that date so borrowers now have until December 31, 2020.
  • The final major change was to the repayment term for any unforgiven PPP loan. The Small Business Administration (SBA) initially permitted a two-year repayment term, but the PPPFA lengthened that term to five years for anyone who received their loan on or after June 5, 2020.

Should you apply for a PPP loan to help your business?

Business owners who have not yet applied for a PPP but believe it would be beneficial under the latest changes have until August 8, 2020, to apply. 

Business lawyers guiding clients through financial assistance programs during COVID-19             

The business lawyers at Murphy Desmond are available to assist with the PPP process as well as other financial programs to assist businesses as they recover from the COVID-19 pandemic. We have offices in Madison, Janesville, Appleton, and Dodgeville, Wisconsin. Please contact us at email@murphydesmond.com or call us at 608.257.7181 to assist you with financial assistance or any other business legal needs.

Updated July 7, 2020

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