The Paycheck Protection Program (PPP) has been subject to changes and hiccups from the start, but a new Paycheck Protection Program Flexibility Act that was just signed into law aims to give small business owners more flexibility in how they can use PPP funds, more time to spend the funds, and an easier process for qualifying for forgiveness.
If you were on the fence about whether or not a PPP loan is right for your bar or restaurant, now may be a good time to apply—especially if you have debts you’re looking to pay down. Of course, you always have the option to decline the loan or pay it back without a prepayment penalty, if you determine it’s not right for you.
If you’re looking for more information on the benefits of a PPP loan, on the Nav blog, details seven ways the new Paycheck Protection Program Flexibility Act can benefit your business, including providing more flexibility to use the money for non-payroll expenses.
Currently, guidance from Treasury and the SBA limits forgiveness for non-payroll expenses to no more than 25% of the forgiven amount. At least 75% of PPP loan proceeds must go toward payroll and payroll-related costs to qualify for full forgiveness.
Gerri explains what changes with the passage of the new act, “To qualify for forgiveness, the Paycheck Protection Program Flexibility Act allows up to 40% of PPP funds to be spent on certain non-payroll expenses while at least 60% of the PPP loan proceeds must be spent on payroll and payroll-related expenses. (Note: It appears that the way the legislation is written, spending less than 60% of PPP funds on payroll won’t simply reduce forgiveness, but may eliminate it. Further guidance will be needed.) The types of non-payroll expenses that may qualify for forgiveness don’t change. They are still limited to business rent, mortgage interest, and utilities for services or obligations in effect by February 15, 2020.”
To learn about the other six possible benefits to your business, visit Gerri’s blog post on Nav’s site.