The Paycheck Protection Program Flexibility Act – Summary

Last updated: June 11, 2020

The federal government enacted the Paycheck Protection Program Flexibility Act to provide borrowers under the Paycheck Protection Program (PPP) a longer window during which to use loan proceeds and more time to repay loans, as well as to loosen the requirements for loan forgiveness.

Required lawyer disclaimer: This is not legal advice. (Duh.) If you would like to explore how the flexibility act has changed your obligations or want advice on how to apply for a loan, please contact us using the short form on the left side of this page. We are here to help you navigate this unprecedented, disruptive period.

The PPP was passed quickly to assist businesses during the COVID-19 crisis. Congress is continuing to review the program to make technical changes and clarify the rules. Additional changes may be forthcoming. Below is a chart of the current changes made to the PPP to date.

Original Rule New Rule
Loan proceeds could be used to cover up to 8 weeks of expenses. Proceeds can be used to cover up to 24 weeks of expenses. However, regardless of when the loan proceeds are disbursed the funds cannot be used after December 31, 2020.
To qualify for loan forgiveness, at least 75% of loan proceeds must be spent on payroll and up to 25% could be spent on approved expenses Only 60% of funds need to be spent on payroll and up to 40% can be spent on approved expenses.
Forgiveness required borrowers to restore workforce levels prior to the end of the 8-week period starting from the disbursement of the loan. Borrowers now have 24 weeks to restore their workforce.  
Additionally, exceptions are available if (i) employees turn down good-faith offers of re-employment, (ii) the company is unable to find qualified employees, or (iii) the company was not able to restore operations by Feb 15, 2020 due to COVID-19 restrictions.
Loan term was 2 years. The loan term has been increased to 5 years at the same 1% interest rate.
The payment deferral period was 6 months. The payment deferral period is now 10 months.
Employers who received a loan could defer payment of Social Security taxes until any portion of the PPP loan was forgiven. Deferred Social Security tax amounts will be due in equal payments in December 2021 and December 2022.

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