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  • Writer's pictureChristina Schenk-Hargrove

Paycheck Protection Flexibility Act

On Friday June 5, 2020 the Paycheck Protection Program Flexibility Act was signed into law. This will allow businesses more flexibility in using their PPP loans and obtaining forgiveness of the loan.


We are expecting new rules and a revised loan forgiveness application form from the SBA and the Treasury. But here are some important changes that this new Act will effect:


  • Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement.  Borrowers who have already received PPP loans can choose to keep the eight-week covered period.

  • Lower the requirement that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent. That means that up to 40 percent of the loan proceeds can be used for rent, utilities, etc., and still be forgiven.

  • Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before February 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to worker or customer safety requirements related to COVID–19.

  • Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on February 15, 2020, and unable to hire similarly qualified employees for unfilled positions by December 31, 2020.

  • Increase to five years the maturity of PPP loans that are approved by SBA (based on the date SBA assigns a loan number) on or after June 5, 2020.

  • Extend the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender.

The last date on which a PPP loan application can be approved is June 30, 2020, so if youre business needs this loan, you may want to apply now.

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