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June 12, 2020

Government relaxes PPP rules under new law

PHOTO | Pixabay.com
By Michelle Tuccitto Sullo

New federal legislation aims to help businesses that are struggling due to the coronavirus pandemic. 

The new Paycheck Protection Flexibility Act of 2020, which became law on June 5, includes several changes to the Paycheck Protection Program (PPP) rules, a sweeping federal initiative that took effect in April to help business owners navigate the crisis.

On Friday, the Greater New Haven Chamber of Commerce and Quinnipiac Chamber of Commerce hosted a joint webinar to discuss the ramifications of the changes for the business community.

“There have been a number of changes, and it’s worth it to take another look,” said Garrett Sheehan, president and CEO of the New Haven chamber and moderator of the event.

Joseph Williams, business advisor with the Connecticut Small Business Development Center, outlined the key points included in the new law.

“It is good news,” Williams said. “This flexibility act has definitely helped small businesses. It gives more time to bring employees back and get loan forgiveness.”

Some of the highlights: 

Businesses now have more time to use PPP money, or 24 weeks instead of eight weeks.

It also reduces the minimum amount which must be spent on payroll to 60 percent, instead of the original 75 percent, to qualify for loan forgiveness. If businesses don’t reach that 60-percent threshold, then they will still receive loan forgiveness, but on a prorated basis, according to Williams.

“The key to having the loan [completely] forgiven is you need to spend 60 percent on payroll,” Williams said.

Additionally, borrowers can use a 24-week period to fully restore their workforce levels and wages, bringing the timeframe to the end of the calendar year instead of June 30, Williams said.

Williams urged businesses involved in the program to track their payroll and expenses, and regularly communicate with their lenders.

“Make sure you follow all the rules so your loan will be forgiven,” Williams said. “Make sure you pay your PPP dollars the way you are supposed to.”

For more information on the act, click HERE, or visit the center’s website at ctsbdc.com.

Contact Michelle Tuccitto Sullo at msullo@newhavenbiz.com.

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