On June 5, 2020, the Payroll Protection Program Flexibility Act of 2020 (PPPFA) became law.
All the Paycheck Protection Program (PPP) rules and false starts combined with the 41 changes that followed have given me (and every other advisor) a colossal headache. On June 5, 2020, Congress and the President have given us further, and more definitive, clarification in the Paycheck Protection Program Flexibility Act (PPPFA), which shall undoubtedly go down in history as the shortest-duration almost-unanimous act in US history (It passed 417-1 in the House and unanimously in the Senate.) As an advisor to businesses, I’ve been frustrated by the complexity and nuances of the PPP, but happy to see relief for small business owners. My friend and colleague, Bob Weins, JD, CPA of Insights3 Advisors in Michigan and I worked together to create the following chart to illustrate the former PPP rules and the changes brought by the PPPFA. By way of comparison, we note that the PPPFA is aimed at making forgiveness easier and opens the possibility of full forgiveness for many businesses. Businesses will now have 24 weeks to restore payroll and can use 40% of the forgiven amount for non-payroll costs as defined in the original act. However, great care should be exercised accounting for the 60% used for payroll, it’s a firm boundary, businesses must use at least 60% of the total loan amount for payroll or no forgiveness will be available.
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Image is Getty from original post on Forbes.com.