By Mat Sorensen

Special to the Chronicle

Congress hopes the new Paycheck Protection Flexibility Act and Paycheck Protection Program for small-business loans will be an improvement.

The bill enhances the PPP by increasing the time small businesses can use funds and receive forgiveness from 8 to 24 weeks and reduces the payroll cost rule from 75% to 60%.

Under the new law, yourhave 24 weeks or until December 31, whichever comes first.

Money unused for qualifying purposes in the “covered period” is not eligible for forgiveness and must be paid back.

Many small businesses had PPP loans in April and May but were unable to reopen due tp legal or health reasons/

Others had a fraction of demand that they had pre-pandemic.

They were seeing their 8 weeks pass while being unable to open and rehire. T

By extending the covered period to 24 weeks, Congress has improved their ability to use loans to bring back workers.

The second-most significant change is lowering the payroll rule to 60%.

By reducing the payroll cost requirement, small business owners will be eligible to have more of their loan forgiven.

Many small businesses with high rent or mortgage payments had difficulty using 75% for payroll in 8 weeks.

The new bill implies that a small business is only entitled to forgiveness if they use 60% on payroll.

This change may trip up some small businesses who received a large loan amount based on 2.5 months of payroll under a vibrant economy in 2019.

In 2020 they are unable to bring back workers or ramp up business quickly enough to spend 60% on payroll.

House and Senate leaders have already been working with Treasury and SBA to see if they can provide favorable guidance on the rule and have discussed hpw to fix it.

Mat Sorensen is an attorney & CEO of Directed IRA & Directed Trust Company. This article originally appeared online at entrepreneur.com/