H.R. Bill 7010 Paycheck Protection Program Flexibility Act of 2020 was passed into law on June 5, 2020. Section 3 of the Bill appears to be the most important for borrowers as it addresses the forgiveness changes. Below are some of the highlights from the Bill:
Sec. 2 Maturity for loans with remaining balance after application of forgiveness.
This section of the bill extends the maturity of the loan (non-forgiven portion) from two years to five years for any loan made after June 5th, 2020; however, borrowers may renegotiate the terms of any existing PPP loan to match the permitted 5-year period.
Sec. 3 Amendments to paycheck protection program loan forgiveness.
This section amends dates and many of the “periods” mentioned in the CARES Act, giving the borrower more time to utilize the proceeds; subsection (a) addresses the extension of the covered period, subsection (c) addresses “extension of deferral period” and subsection (d) addresses “effective date; applicability.”
Subsection (b) addresses Forgiveness. It extends the covered period to “24 weeks from the date of the loan’s origination, or December 31st, 2020, whichever comes earlier.” Additionally, subsection(b) addresses FTEs and an “exemption based on employee availability.” Finally, subsection (b) also puts a limitation on forgiveness for “at least 60 percent of the covered loan amount for payroll costs, and may use up to 40 percent of such amount for any payment of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation), any payment on any covered rent obligation, or any covered utility payment.”
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