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The Paycheck Protection Program Flexibility Act: What You Need To Know

By Mary Kay Shaver posted 21 days ago


On June 5, 2020, President Trump signed the Paycheck Protection Program Flexibility Act (PPP Flexibility Act), Pub L No 116-142, 134 Stat 641 (2020). Importantly, the PPP Flexibility Act provides the following relief for existing PPP loans:

  • Extends the period for PPP loans from June 30, 2020, to December 31, 2020, 15 USC 636(a)(36)(A)(iii)
  • Extends the forgiveness covered period to the earlier of 24 weeks after the date of the loan (increased from 8 weeks) or December 31, 2020; a borrower under an existing PPP loan can elect to use the 8-week period, 15 USC 636(a)(36)
  • Extends the rehire exemption date from June 30, 2020, to December 31, 2020
  • Adds exemptions to the forgiveness reductions due to workforce reductions if the borrower can document in good faith
    • an inability to rehire employees and hire similarly qualified employees for unfilled positions on or before December 31, 2020, or
    • an inability to return to the same level of business activity as existed on February 15, 2020, due to compliance with governmental restrictions imposed March 1, 2020. through December 31, 2020
  • Requires at least 60 percent of the forgiveness amount to be attributable to payroll costs (decreased from 75 percent) and allows up to 40 percent to be attributable to non–payroll costs (increased from 25 percent)
  • Extends the deferral period for payments of principal, interest, and fees to the date on which the forgiveness amount is remitted to the lender; a borrower must apply for forgiveness within 10 months after the forgiveness covered period or the deferral period will end, 15 USC 636(a)(36)(M)

For new PPP loans, the PPP Flexibility Act provides for a minimum maturity of a PPP of five years.