A new law will give businesses who have taken loans from the Paycheck Protection Program (PPP) more flexibility in how they use the funds and more time to pay them back.

The Paycheck Protection Program Flexibility Act received near-unanimous bipartisan support. It was passed by voice vote in the House and Senate and last week and signed into law on Friday. It stipulates the following:

– The covered period for loan forgiveness will extend from its original time frame—eight weeks after the loan was disbursed—to 24 weeks after it was disbursed.

– While the program previously required that, for all or a portion of a loan to be forgiven, 75% of it must be spent on payroll costs, that threshold has now been lowered to 60%.

– The new rule also provides a “safe harbor” for loan forgiveness if a business has been forced to reduce its workforce or is unable to return to regular business activity due to COVID-19  regulations issued by a government department.

Previously, the law penalized companies that couldn’t rehire their whole workforce, no matter the cause.

– It increases the maturity of PPP loans to five years. It used to be two.

– It extends the deferral period for initial repayment of unforgiven loans to 10 months. It was previously two. The interest rate remains 1%.

– PPP borrowers are now permitted to delay paying their 2020 payroll taxes. One-half of their share of payroll taxes is now due on December 31, 2021, and the remaining half is due December 31, 2022. This includes borrowers who have had their loan forgiven.

The PPP is open to companies with less than 500 workers. Loan are capped at $10 million.

While the initial PPP funds ran out quickly, bankers have said there is still money available to those who need it.

One thing is staying the same: The new rules confirm that the last day to apply for a PPP loan is June 30. Which means that if the new rules suddenly make this program more attractive to jewelers, they need to apply soon.

Jewelers of America’s guidance on the rule change can be seen here. It’s also holding a webinar on the changes, which you can sign up for here.

More information can be found on the Small Business Administration’s COVID-19 relief page.

(Image courtesy of the Farm Credit Administration)

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