CA's Budget & Nonprofits: Part Four
05.25.2023 | Linda J. Rosenthal, JD
Over the past week, the House of Representatives and Senate passed the Paycheck Protection Program Flexibility Act and the bill awaits the President’s signature. The bill provides borrowers with additional flexibility and time to use PPP loan funds and still have the loan forgiven.
Borrowers will now have 24 weeks from the disbursement of their loan to use the PPP funds. The bill also creates increased flexibility in reducing the amount of loan money that must be used for payroll purposes from 75% to 60%. For small businesses and nonprofit organzations who have not been able to reopen, or only recently reopened, this is a critically needed update.
The bill also amends the CARES Act to provide that any reduction in the amount of loan forgiveness is avoided if the employer rehires all employees laid off between February 15, 2020 and April 26, 2020, or increases their previously reduced wages, no later than December 31, 2020.
The bill creates an additional exemption to the reduction-in-loan forgiveness. The exemption states that the amount of loan forgiveness will be determined “without regard to a proportional reduction in the number of full-time equivalent employees” if the borrower, in good faith:
FPLG is closely monitoring the evolving PPP landscape and will continue to provide resources and updates as they become available.