Paycheck Protection Program Flexibility Act

Earlier this week, the Senate passed the House bill to extend the time for PPP loan recipients to spend the funds and still qualify for loan forgiveness. President Trump is expected to sign this bill which is called the Paycheck Protection Program Flexibility Act.

The Paycheck Protection Flexibility Act includes several changes to the Paycheck Protection Program as initially released in the CARES Act. Here are some of the changes that are designed to make it easier for borrowers to reach full forgiveness:

  • Forgiveness – The biggest change in the bill increased the number of weeks to spend the funds and still apply for forgiveness from 8 weeks to 24 weeks.
  • Extension of Covered Period – The definition of covered period originally defined as June 30, 2020 is now modified to December 31, 2020.
  • Exemptions Based on Employee Availability – During the covered period, the amount of loan forgiveness will not be reduced if the employer is able to document the inability to rehire individuals or hire similarly qualified employees for unfilled positions on or before December 31, 2020.
  • Limitation of Forgiveness – The bill also reduced the threshold to spend 75% of the loan amount on payroll costs down to 60%. The language now says that to receive loan forgiveness, an eligible recipient shall use at least 60% of the loan amount for payroll costs and may use up to 40% for eligible non-payroll costs.
  • Application for Certain Eligible Recipients – Allows recipients who received a loan prior to the date of enactment of this new bill to elect for the covered prior to end on the date 8 weeks after the loan origination.
  • Extension of Deferral Period – For loan balances that are not forgiven, the Act modifies the period to begin making loan payments from 6 months to one year.
  • Maturity for Loans with Remaining Balance After Application of Forgiveness – Changes the loan terms for repayment from 2 years to 5 years.
  • Delay of Payment of Employer Payroll Taxes – Allows for PPP loan recipients to delay the employer portion of social security taxes as defined in the CARES Act.


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