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Paycheck Protection Program Flexibility Act Passed on June 5, 2020

Updated: Jun 11, 2020



The Paycheck Protection Program Flexibility Act (PPPFA) was signed into law on June 5, 2020. The act amends the original Paycheck Protection Program (PPP) and gives small business owners more flexibility in how and when loan funds are used. Highlights of the amendments include:


- Under the original program, in order to be eligible for loan forgiveness, businesses were required to use loan funds for payroll expenses in the eight-week period following the loan disbursement date. Under the new act, the eight-week period has been extended to twenty-four weeks. However, the twenty-four-week period may not extend beyond December 31, 2020.


- Under the original program, in order to be eligible for loan forgiveness, at least seventy-five percent of loan funds had to be spent on payroll expenses. The remaining twenty-five percent was still eligible for loan forgiveness so long as it was spent on rent, mortgage interest, or utilities. Under the new act, to be eligible for loan forgiveness, only sixty percent of loan funds need to be spent on payroll expenses. The remaining forty percent remains eligible for loan forgiveness so long as it is spent on rent, mortgage interest, or utilities.


- The repayment period for any unforgiven amount of the PPP loan is extended from two years to five years.


- The deadline to restore the workforce to pre-COVID-19 levels is extended from June 30, to December 31, 2020.


- The act provides two new exceptions to the requirement that workforce levels be restored to pre-COVID-19 levels. The first is for businesses that were unable to find qualified workers. The second exception is for businesses that were prevented from returning to full operations due to COVID-19 related restrictions.


- The deadline to apply for the Paycheck Protection Program remains June 30, 2020.


- The interest rate for unforgiven PPP loan amounts remains one percent.


Our understanding of the Paycheck Protection Program and its application continues to evolve. The Small Business Administration’s frequently asked questions publication regarding PPP is up to forty-eight questions with more likely to be added. Stay tuned to the SBA for updates regarding PPP and other CARES relief funding programs and, if necessary, seek professional assistance in interpreting the legal application of PPFA to your specific situation.

DISCLAIMER: The information provided on this website does not, and is not intended to, constitute legal advice. All information, content, and materials available on this site are for general informational purposes only and might not include the most up-to-date legal information. Use of or access to this website or article does not create an attorney-client relationship. Readers should contact their attorney to obtain advice with respect to any specific legal matter.

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