Changes to PPP Loan Forgiveness: PPP Flexibility Act

Throughout the CARES Act the one thing we can all be certain of is change.  As many businesses are nearing the end of their eight week covered period, we know that even more change can be somewhat unnerving.   On a positive note, many of the changes being considered in the Paycheck Protection Program (PPP) Flexibility Act could provide further relief.


The United States Senate has passed the House version of PPP legislation. Leaders from both parties in the Senate pushed to pass the legislation on Wednesday, as the clock on the initial eight-week window recently expired for the first recipients of PPP loans.  The Senate approval sent the House bill to President Donald Trump, who signed it on June 5, 2020.  Below are key points business owners need to be aware of.
Key Revisions Based on the PPP Flexibility Act:
  • 75% payroll to non-payroll spending requirement is now changed to state 60% must be spent on payroll
  • Non forgiven amounts would have a minimum term of 5 years (previously loans had 2 year amortization)
  • Program period which was originally February 15, 2020 – June 30, 2020 would be extended to February 15, 2020 – December 31, 2020
  • Covered period means period beginning on origination of covered loan and ending earlier of:
    • Date of 24 weeks after such date of origination (3 times the previous 8 week period)
    • December 31, 2020
  • Borrower can keep the original 8 week period if they would like
  • Full-time employee (FTE) will not be impacted if borrower can document either of the following:
    • Both of the following
      • An inability to rehire individual(s) who were employees on February 15, 2020
      • An inability to hire similarly qualified individuals on or before December 31, 2020
      • OR an inability to return to the same level of business activity the
        business was operating at before February 15, 2020 due to:

        • Compliance with requirements established, or guidance issued by the Secretary of Health and Human Services, Director of Centers for Disease Control and Prevention, Occupational Safety and Health Administration during the period on March 1, 2020 and ending December 31, 2020
        • Guidance would be  related to the maintenance of standards for sanitation, social distancing or any other worker or customer safety requirement related to COVID-19
    • The deferral of interest / principal now appears to start the sooner of the date the amount of forgiveness is remitted to the lender, OR 10 months after last day of the covered period for those who have not submitted a forgiveness application, as compared to the previous flat 6 month deferral
    • Companies can now fully utilize the payroll tax deferral for 2020, even if receiving forgiveness under PPP
    We have our eyes and ears open for what is coming next, and we will continue to provide updates as we have them.   In the meantime if you have any questions please do not hesitate to reach out to a member of our COVID-19 task force at [email protected], visit our COVID-19 Resource Center, and make sure to register for our Q&A Happy Hour on changes to loan forgiveness.