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Navigating the new PPP Flex Act

Updated: Jun 7, 2020

You've been playing the game, but did you know the rules have changed? Learn about the recent amendments to the Paycheck Protection Program.

On June 5, 2020, President Trump signed the “PPP Flex Act” into law. The Flex Act provides additional, more expansive support to small businesses impacted by Covid-19. The major changes are outlined below:

  • Loan Maturity moved to Five Years instead of Two for new PPP Loans

  • Deadline to obtain a PPP loan extended from June 30th to December 31st

  • Time period in which borrowers can use PPP funds and then seek forgiveness increased from eight weeks to 24 weeks after origination or December 31, 2020.

  • Percentage of PPP funds required to be used for covered payroll costs in order to achieve any level of loan forgiveness reduced from 75% to 60%.

  • Standards loosened for obtaining an exemption to loan forgiveness reduction based on full-time equivalent (FTE) headcount.

  • Timeframe in which borrow must make first payment of principal, interest, and fees on PPP loan deferred until date on which loan forgiveness is remitted to lender.

  • Permitting small businesses that receive PPP loan forgiveness to defer certain payroll taxes.

These changes have a material impact on how businesses can and should best proceed with spending their loan proceeds. Many businesses are now scrambling to re-tool their strategies. This includes reevaluating personnel levels, paying specific expenses and deferring others, reworking compensation plans, and revising pro-formas and budgets. Many small businesses who lack the resources of a large CPA or law firm, are struggling to determine what all of these changes mean for their business and how best they should react.

LionShare Partners (LSP), a boutique business advisory firm, is offering free 15-minute one-on-one informational sessions and 1-hour free group seminars to help these business owners navigate their PPP loans and develop the optimal strategy for utilizing their funds. Since the President signed the Flex Act into law, LSP’s Founder & CEO Brandon Rosenblatt reports “We have seen a huge increase in demand from business owners looking for guidance. This is a particularly difficult and confusing time for many small business owners. There’s a lot of bad information out there so it’s important to get good advice before making decisions that would very likely determine the fate of their organization. Anywhere we can help, we will right now.”

LSP is one of several firms who has focused their operation around the PPP Loan and its ever changing requirements. In addition to providing general guidance, LSP provides its clients with 12-month cash flow models to help guide companies on the best use of their funds—both based on the condition of their business today and what they expect their business will look like over the next four quarters. The PPP Program, like the economy as a whole, is a moving target so business and professional organizations like LSP alike are forced to remain vigilant and constantly adapt with the changes. Now more than ever, companies need to make the correct decisions.

Any opinions expressed and any legal positions asserted in the article are those of the author(s) and do not necessarily reflect the opinions or positions LionShare Partners or its advisors. This article is for general information purposes and is not intended to be and should not be taken as legal advice on any particular matter. It is not intended to and does not create any professional-client relationship. Because legal advice must vary with individual circumstances, do not act or refrain from acting on the basis of this article without consulting professional legal counsel. If you would like additional information on the subject matter of this article, please feel free to contact LionShare Partners. If you communicate with LSP, whether through email or other means, your communication does not establish an engagement with LSP. or any of the firm's advisors. At LionShare Partners, an advisor-client relationship can be formed only by personal contact with an individual advisor, not by email, and requires your execution of a written engagement agreement with LionShare Partners.

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