Federal Payroll Protection Program Flexibility Act Webinar June 16

On June 5 the President signed into law the Paycheck Protection Program Flexibility Act. The purpose behind the Flexibility Act was to help businesses by providing a greater opportunity to seek PPP forgiveness.

The changes that will be ushered in by the Flexibility Act will be helpful for many businesses. However, as described below, now that there are more roads to reach the ultimate goal of loan forgiveness, businesses will need to be careful to understand their options and select the route that is best for them.


On June 16 McKonly & Asbury will host a webinar from 10:00 to 11:00 a.m. to review the Paycheck Protection Program Flexibility Act. This includes recent changes to PPPFA rules and its impact on business, both good and bad.

You will also be able to ask questions and interact with the presenters. Please click here to register.

Primary Changes to Paycheck Protection Program Flexibility Act:

— Expands the covered period during which businesses can make forgivable use of their loan to 24 weeks or the end of the year, whichever comes sooner.

— Extends, from June 30, 2020 to December 31, 2020, the deadline by which a business can eliminate a reduction in employee headcount or compensation levels that occurred between Feb. 15 and April 16 and thereby avoid a reduction in forgiveness.

— Adds additional safe harbors for businesses that eliminated workers and have been unable to rehire.

— Preempts the SBA’s rule requiring businesses to spend 75% of their forgivable PPP loan funds on payroll costs and requires, instead, that only 60% of the PPP loan be spent on payroll costs. Some Senators raised concerns that, as phrased, the Flexibility Act could be read to say that any business that spends more than 40% of its PPP loan on eligible non-payroll costs would not be eligible for any loan forgiveness. This was clearly not the legislative intent, and we expect that the SBA regulations will clarify that a business in such a situation will still be eligible for partial loan forgiveness, it just will not be able to have any non-payroll expenses that exceed 40% forgiven.

— Allows businesses that receive a PPP loan to take advantage of the provisions in the CARES Act permitting businesses to defer payment of 2020 payroll taxes (under the CARES Act businesses receiving a PPP loan were not eligible for the tax deferral). This is a major positive change.

— Gives borrowers that don’t apply, or qualify, for full loan forgiveness, at least 10 months after the PPP loan program ends to begin making payments on the loan and adds additional payment deferral options in the event that the SBA has not yet refunded the lender for the loan funds.

— Extends the minimum PPP loan maturity from two to five years for PPP loans, but only for those made after the enactment of the Flexibility Act, and allows borrowers and lenders to negotiate an extension of the maturity date on existing PPP loans.

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