Congress passes Paycheck Protection Flexibility Act

Changes are now underway for the Paycheck Protection Program, altering criteria for business owners to be eligible for loan forgiveness.

The Paycheck Protection Flexibility Act makes a number of retroactive improvements to the PPP forgiveness criteria, including extending the time borrowers have to spend the funds, increasing the percentage of loan funds allowed to be spent on non-payroll expenses, and providing more time for business owners to restore their workforce levels.

The following is a snapshot of the most relevant provisions in the Paycheck Protection Flexibility Act impacting eligibility for forgiveness:

  • PPP borrowers can choose either the original 8-week covered period or the earlier of 24 weeks from the date of PPP loan disbursement or December 31, 2020.
  • Borrowers have more flexibility in how they spend PPP loan funds. Currently, borrowers must spend at least 75% of PPP loan funds on payroll-related expenses with the remaining 25% to be spent on mortgage interest, rent or utilities. Under the new bill, borrowers seeking forgiveness will only have to spend 60% on payroll expenses and can use 40% of the loan for the other non-payroll expenses. It is important to note: Under the original PPP, borrowers who spent less than 75% of loan funds on payroll expenses would have their forgiveness reduced by that same amount
  • Borrowers now have until December 31, 2020, to restore workforce levels and wages to the February 15, 2020, levels. The original deadline was June 30.
  • The new bill codifies guidance that allows borrowers to exclude from FTE calculations those furloughed employees who reject good-faith offers to return to work.
  • The bill also allows employers to adjust their FTE calculations if they show they cannot find qualified employees OR if they show they cannot restore business activity to levels at or before February 15, 2020, levels by December 31, 2020, due to operating restrictions as a result of COVID-19.
  • Borrowers will have up to five years to repay the loan instead of two for those loans disbursed after the enactment of the PPP Flexibility Act.
  • Payroll tax deferral is now available for any borrower through December 31, 2020, whether or not the PPP loan is forgiven.
  • Borrowers will have more time to begin making interest and principal payments. Currently, borrowers must begin making payments within six months of the last day of the covered period. Under the new bill, repayment will be deferred until the loan is forgiven by the lender.

We expect more guidance to be released in the coming days and weeks, and we will keep you apprised through emails and webinars how this legislation impacts you.

We are offering a service to our clients to assist with the tracking and documentation of information for the application of PPP loan forgiveness. We will be in touch with those of you who are using this service to discuss how these changes will affect your businesses. If you would like more information about this service, please contact us at