PPP Flexibility Act

The Senate passed the House version of the “Paycheck Protection Program Flexibility Act of 2020” late last night. It is expected that President Trump will sign the bill into law. A brief overview of the provisions are as follows:

  • The borrower may choose to extend the previous 8-week period to instead be the earlier of 24 weeks or December 31st, 2020.
  • The previous 75% payroll expenditure requirement has now been dropped to 60%. However, the requirement now has a cliff effect. The Act is written in such a way that if the borrower does not reach the 60% payroll requirement, then none of the loan will be forgiven.  Previously this requirement was not an all or nothing calculation.
  • Previously, in order to avoid a reduction in forgiveness, borrowers had until June 30th to restore their head count and wages to the levels in existence prior to the pandemic. Under this new Act, the June 30th deadline has been pushed back to now be the earlier of Dec 31st or the end of the borrowers 24 week period.
  • This new Act creates a couple new exceptions which will allow a borrower to avoid being penalized by a reduction in workforce. These two new exceptions take into account situations in which a borrower is unable to find qualified employees as well as situations where the borrower is unable to restore its operations due to a restriction which is in place due to COVID-19.
  • The previous 2 year loan term would be extended to 5 years for loans which originated after the passage of this Act.
  • Under this new Act the previous 6 month deferral period has been extended to now last until the date on which the amount of forgiveness is remitted to the Lender.
  • Additionally the Act will allow borrowers to take advantage of the payroll tax deposit deferral provision which was put in place under the CARES Act. Under previous law, recipients of PPP funding were prohibited from take advantage of this CARES Act provision.


For a more detailed explanation of these provisions please see link below for the House version of the bill.

Paycheck Protection Program Flexibility Act of 2020

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