The new Government Paycheck Protection Program 3.0

Paycheck Protection Programs in Miami – The first week of June has come and gone, and Miami Beach is slowly beginning to feel somewhat normal. Traffic has returned, businesses are beginning to open and the beach is open as well. We at Manal Oliver & Associates are still mostly working from home and haven’t made any plans to open the office anytime soon for all the staff. Although it is not the same as having everyone in the office at the same time, working from home has been productive for all of us.

We are returning to working on tax returns and the new Government Paycheck Protection Program 3.0, (called the Paycheck Protection Flexibility Act). This Act triples the time small businesses and other PPP loan recipients have to spend the funds and still qualify for forgiveness of their loans.

Paycheck Protection ProgramsAnother significant change in the PPP is the threshold for the amount of funds required that must be spent on payroll costs to qualify for forgiveness up to 60% of the loan amount. Currently, PPP borrowers can choose to keep the original eight week period or extend the eight weeks to 24 weeks.

If you are a new PPP borrower, you will have a 24-week covered period. However, you cannot extend the period beyond Dec. 31, 2020. This choice will make it easier for more borrowers to obtain complete, or nearly complete, forgiveness.

Significant changes in payroll forgiveness

As now written, borrowers are required to spend, at a minimum, 60% of the loan on their payroll in order to receive full forgiveness. However, partial forgiveness is available for under 60%. Previously borrowers were required to reduce the eligible forgiveness amount when less than 75% of eligible funds were used for payroll.

Borrowers are now able to use the 24 weeks to restore workforce levels and wages to the pre-pandemic levels required for full forgiveness. A significant change from the previous deadline of June 30, but it must be done by Dec. 31.

New rules to the Paycheck Protection Program

The new rules include two new exceptions that allow borrowers to achieve full loan forgiveness even when they don’t fully restore their workforce. Previously, rules allowed borrowers to exclude from the evaluation offers made on good faith to rehire employees and give them the same hours and pay scale as they received before Covid-19. The new Payroll Protection Plan will make it possible for borrowers to make adjustments if they are not able to find or hire employees who are qualified or if it isn’t possible to rebuild their business to the level it was at on February 15, 2020 due to restrictions related to operating under Covid-19

New PPP borrowers now have five years to repay the loan instead of two years. Existing borrowers can now extend their PPP loans up to five years provided that both the borrower and lender agree to the terms, the interest will remain at 1%.

The bill also allows businesses that took a PPP loan to postpone payment of payroll taxes, which was prohibited under the CARES Act.

Contact Manal for help with Paycheck Protection Programs, Government Relief Programs: 305.868.7620

If you plan to re-open your business soon or feel this is an excellent time to start a new one, let us help you organize and plan so you can move forward and grow at a pace that is affordable and doesn’t overextend you as we adjust to the new 90% economy.