Congress passed the Paycheck Protection Program Flexibility Act. Here’s what you need to know.

Para obtener información sobre el Programa de Protección de Pago en Español, haga clic aquí y mande un correo a membership@usworker.coop.

Important note: the guidelines for the Paycheck Protection Program and the Economic Injury Disaster Loan are still being updated regularly. Be sure to check our usworker.coop/covid-19 resource center for updates and be in contact with your lender regarding your loan.

On June 5th, the Paycheck Protection Program Flexibility Act was signed into law. The bill includes some much needed changes that will help businesses and organizations utilize the funds to meet their needs.

  • The covered period of the loan is now extended to 24 weeks or December 31, 2020, whichever is earlier. This is up from the original 8 week period, extending the time borrowers have to spend the loan funds and the safe harbor period to re-hire workers, which will allow flexibility when calculating your FTEs.
  • Up to 40% of the loan can be used for eligible non-payroll cost funds, up from 25%, increasing the amount that may be spent on other eligible uses like utilities and rent.
  • The repayment terms are now up to 5 years, instead of 2 years.
  • The payment deferral period has been extended so that payments on any unforgivable portion of the loan will not begin until the amount of forgiveness has been determined and payment has been remitted to the lender. In order words, repayment of the unforgivable part of your loan will not start until your lender receives reimbursement for the forgivable parts of your loan. Note: Recipients must apply for forgiveness within 10 months after the last day of the covered period.
  • Allows payroll tax deferment for PPP borrowers that receive forgiveness.

Our current understanding us that PPP loans that are distributed AFTER the June 5 signing will operate under these guidelines, and that it is up to the lender to apply these guidelines to any loans signed before June 5th. You should be in contact with your lender to ensure that these rules will be extended to your loan.

The USFWC continues to advocate on behalf of worker cooperatives across the country. Despite the flexibility extended in the PPP loan through this act, we know that further updates to the legislation will be required. Stay tuned to the usworker.coop/covid-19 for updates.

You can view the latest information from the Small Business Administration on PPP guidelines here.

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