Paycheck Protection Program Flexibility Act of 2020 Major Provisions

With this new bill passing, we wanted to provide an update to the key provisions since some businesses are using retirement plan employer contributions for some of their expenses for forgiveness of the loans. The main features are (this come from the House version since we’re awaiting final text):

  • To extend the covered period from 8 to 24 weeks (or December 31, 2020, if earlier)
  • Add exemptions based on employee availability
  • Change the forgiveness requirement from payroll expenses as 75% of the forgivable amount to 60%:
    • Say you have $100,000 in payroll expenses
      • Prior to the Flexibility Act, your maximum forgivable amount would be $133,333 ($100,000 in payroll expenses divided by 75%)
      • Now, the maximum forgivable amount will be $166,667 ($100,000 in payroll expenses divided by 60%)
  • Modifications to the loan payment deferral period

Under the prior 8-week covered period, no more than $15,385 in payroll expenses could be forgiven for any one employee. We would expect, but cannot guarantee, that the maximum forgivable amount would be changed to $46,154 ($100,000 * (24/52) to reflect the new covered period.

The Small Business Administration (SBA) will have their hands busy issuing updated guidance for the new details of the program, so we will continue to watch the details unfold.

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