PPP Flexibility Act

Image of a person working at a computer that says PPP Flexibility Act

This bill modifies provisions related to the forgiveness of loans made to small businesses under the Paycheck Protection Program implemented in response to COVID-19 (i.e., coronavirus disease 2019).

Under this new legislation:

  • The Paycheck Protection Program Flexibility Act extends the period in which the funds must be spent from 8 weeks to 24 weeks (or December 31,2020, whichever comes first)
  • Congress has reduced the payroll cost rule from 75% to 60%
  • SBA has clarified that the maturity of all PPP loans approved on or after June 5, 2020 will be five years. This five-year period can be extended to approvals before June 5 if the lender and borrower mutually agree to a five-year maturity
  • Businesses now have until December 31, 2020, to rehire workers in order for their salaries to count towards forgiveness
  • Loan forgiveness will not be reduced if there’s a reduction in headcount if borrowers can demonstrate that they were unable to rehire former employees/individuals of similar skills or they cannot resume normal business activity levels because of compliance with safety requirements
  • The PPP Flexibility Act extends the deferral period to the “date on which the amount of forgiveness determined under Section 1106 of the CARES Act is remitted by the lender”.
  • PPP borrowers that fail to apply for forgiveness within 10 months after the last day of the 24-week forgiveness period must begin making principal and interest payments