On May 28, 2020, the House passed the Paycheck Protection Program Flexibility Act of 2020 (“PPP Flexibility Act” or “Bill”). The Senate approved the Bill on June 3, 2020. The full text of the Bill can be accessed
What is the PPP Flexibility Act?
The PPP Flexibility Act changes several key provisions that were put in place under the original Paycheck Protection Program (“Program”). The main changes are as follows:
- Borrowers under the Program can choose to extend the original 8-week covered period to 24 weeks, or they can keep the original 8-week period.
- The requirement to use at least 75% of the Program funds on payroll has been reduced to 60%. However, under the new Bill, if a borrower does not use at least 60% of the funds for payroll, then the loan will not be forgiven at all.
- Borrowers now have until December 31, 2020, to rehire employees and restore their workforce to pre-pandemic levels rather than June 30, 2020, that was required under the original Program, while also creating additional new exceptions to allow borrowers to achieve full forgiveness even if they cannot restore their workforce levels.
- For loans that do not achieve full forgiveness, the loan term has changed from two years to five years. The interest rate remains at 1%.
- The provision requiring borrowers to stop deferring payroll taxes once their loan was forgiven has been removed. Borrowers can continue to defer payroll taxes if eligible under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
The Bill now will go to the President’s desk where he is expected to sign it.