Paycheck Protection Flexibility Act

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What does this legislation mean for your business?

On June 5, 2020, the president signed the Paycheck Protection Flexibility Act into law. This legislation modifies certain PPP loan forgiveness provisions. This comes after the House and the Senate's overwhelming support for the bill. 

Our goal is to help you and your small business maximize forgiveness to best position you for success long-term. You can review the highlights of the bill and what it means for your business' PPP Loan Forgiveness process below. 

Increases Time to Use Loan Funds

The CARES Act currently requires PPP borrowers to spend the loan over an 8 week period following the receipt of funds to have the loan forgiven. The House-passed bill extends this period to 24 weeks or until December 31, 2020.

Amends the 75% Payroll Rule

Currently, PPP borrowers must use at least 75% of PPP loans for payroll costs to receive full forgiveness. This legislation reduces this amount to 60%, allowing 40% of the loans to be used for non-payroll costs, which include rent, mortgage interest and utilities.  

Allows Participation in Employer Payroll Tax Deferral

Currently, PPP borrowers cannot also participate in the CARES Act payroll tax deferral. If it becomes law, this exclusion would be eliminated.

Provides Safe Harbor for Some Job Reductions

Currently, PPP borrowers must maintain their FTE level to secure full forgiveness of their loan. The new bill would provide safe harbor from this requirement for borrowers in certain circumstances, including extending the deadline to December 31, 2020, with exceptions based on employee availability.

Increases Deferral Period

Under the CARES Act, borrowers have an automatic six month deferral period before they must begin to repay any unforgiven loan funds. This bill increases the deferral period to 10 months.

Extends Terms for Unforgiven Portion

Currently, PPP loans have a term of two years for any unforgiven principal. If enacted, this legislation extends the amount of time borrowers have to repay the loans to five years, at 1.00% interest. Any pre-existing loans may amend the note to reflect new maturity terms if both the lender (United Community Bank) and borrower mutually agree.

United CARES Act Resources for You

COVID-19 has significantly impacted nearly every business in our community. We have created CARES Act resources and tools to provide you with guidance to help navigate this unprecedented time.

United Community Bank will not pay fees to or otherwise compensate anyone acting as an agent of the business for advising on or assisting in the preparation of the Paycheck Protection Program loan application, forgiveness application or otherwise.

The information provided is accurate and updated as of June 4, 2020. Terms and conditions are subject to change.