Construction Law

The Flexibility Act: PPP Loan Requirements Reduced to 60 percent featured image

The Flexibility Act: PPP Loan Requirements Reduced to 60 percent

The Paycheck Protection Program (PPP) has been a mixed bag in terms of providing crisis relief for business owners. On the one hand, the program will assist over 30 million business owners. On the other hand, the rules for loan forgiveness have been difficult to follow and in flux. It seemed like construction business owners would have to settle for these strict requirements — that is, until now. 

With the passing of the PPP Flexibility Act, congress has made substantial changes to the PPP initiative. Below, we go over the Act and look at what’s changing and what’s staying the same. For assistance with applying for a PPP loan before the deadline, consult a Lakeland construction attorney from Cotney Attorneys & Consultants. 

Changes Under the Flexibility Act 

By now, you shouldn’t be surprised by any new changes made to the PPP. The Small Business Administration (SBA) is set to publish its 19th Interim Final Rule. We’ve covered changes made to the PPP loan requirements before, but we believe these new changes will be of particular benefit to those in the construction industry: 

  • Loan Forgiveness: The Act made a couple of important changes regarding loan forgiveness. To start, the amount that must be spent on payroll expenses has been reduced from 75 percent to 60 percent. This is great news considering that construction companies must also consider their rent and utility expenses. Even if your company doesn’t quite hit the 60 percent threshold, it may still qualify for partial forgiveness. 
  • Covered Period: The Act extends the covered period for loan forgiveness from eight weeks to 24 weeks. Previously, business owners were under the gun to spend the entirety of their loan within an eight-week period if they wanted it to be completely forgiven. This left many business owners hesitant to spend their money in the first place. Now, you can benefit from this financial cushion for roughly half a year. 
  • Replacing full-time equivalent employees: Under the Act, business owners now have between June 30, 2020, and December 31, 2020, to replenish their full-time headcount. Deciding who qualifies as a full-time equivalent employee can be confusing in and of itself. Review our previous article on the topic for a better picture of your full-time headcount requirements. 
  • Maturity Date: The Act extends the maturity date for loans made after June 5th, 2020, from two to five years, meaning that borrowers have a full five years before unforgiven loan amounts must be paid back in full. Those who borrowed before June 5th can still qualify for a later maturity date if their lender agrees. 

We hope this article has shed further light on PPP loan requirements. We understand that following these rules and requirements may be frustrating, but it could be your best chance of seeing your business through these difficult times. If your business requires assistance applying for a PPP loan or financial advice in general, call Cotney Attorneys & Consultants and one of our Lakeland construction attorneys would be more than happy to assist you. 

If you would like to speak with a Lakeland construction lawyer, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.