On June 5, 2020, President Trump signed into law the bipartisan Paycheck Protection Program Flexibility Act (PPPFA) of 2020 (HR 7010). The legislation aims to expand usability of the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s small business loan program.
The PPPFA makes several changes to the rapidly implemented Paycheck Protection Program (PPP) administered by the Small Business Administration (SBA).
Most notably, the legislation includes some of the following changes:
- Extends the expense forgiveness period from eight weeks to 24 weeks. Borrowers who received loans before June 5, 2020, may elect to continue using the eight-week covered period.
- Reduces the amount that must be spent on payroll costs from 75 percent to 60 percent.
- Extends the two-year loan repayment requirement to five years for future borrowers (existing PPP loans can be extended up to five years if lender/borrower agree).
- Extends the June 30, 2020, rehiring deadline to December 31, 2020.
- Allows payroll tax deferment for PPP recipients.
The final date to obtain a PPP loan remains June 30, 2020.
A joint statement from the SBA and the U.S. Treasury indicated it will promptly issue rules and guidance, a modified borrower application form, and a modified loan forgiveness application implementing these legislative amendments to the PPP.
Source: CCH/Wolters Kluwer