Both the House of Representatives and the Senate have passed the Payroll Protection Plan (PPP) legislative update. Under the PPP Flexibility Act:
• The original eight-week timeline for businesses to spend their loan money on payroll for it to be forgiven would be increased to 24 weeks.
• A June 30 rehiring deadline would be extended to Dec. 31.
• A requirement that 75 percent of loan money be spent on payroll would be reduced to 60 percent.
• Employers would be given more leeway on loan forgiveness if they can show they were unable to rehire people or reopen to business in a way that complies with safety standards.
• The bill allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act.
Please keep in mind that this does not change your PPP loan amount or other restrictions, though it is anticipated that the $100K gross comp cap would now be prorated over 24 weeks (=$46,154).
Now, the two chambers must reconcile some minor differences before the bill heads up to the president for his final signature. So, as usual, there will be more details coming in this area.
Additionally, according to the American Institute of CPAs (AICPA), we expect to get legislation in the second half of the year to allow businesses to deduct expenses related to the PPP loan forgiveness. Nothing has been proposed or introduced yet, however. We will continue to monitor this also.