The Paycheck Protection Program Flexibility Act: What You Need to Know

By Sweeney Conrad, PS | Jun 04, 2020

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PPP Flexibility

President Trump is expected to sign the Paycheck Protection Program Flexibility Act which has been approved by congress. The Act will provide relief to business owners by allowing for more flexibility and extended deadlines for Paycheck Protection Program (PPP) loan money.

One notable change effected by the PPP Flexibility Act is that you’ll have longer to repay any loan proceeds that are not forgiven. Originally, any portion of a PPP loan that was not forgiven was required to be paid back within 2-years. The PPP Flexibility Act extends that amount of time to 5 years. While this technically applies to only loans that are taken after the Act passed, lenders and borrowers are free to negotiate the terms to apply to any existing PPP loans.

In addition, PPP loan forgiveness will be much easier to come by under the PPP Flexibility Act due to:

    • An extension of the covered period from 8 weeks to 24 weeks, making it much easier for businesses to incur enough expenses to reach the full loan amount. This deadline is optional. Businesses who have spent all of their proceeds during the 8 week period and qualify for full forgiveness do not have to wait until the end of the year to apply.
    • Allowance of more qualified expenses to be non-payroll items. Previously, there was a 25% cap for non-payroll costs, that amount has been raised to 40%. It’s unclear at this point, but the borrower may have to expend at least 60% of the loan proceeds on payroll costs to obtain any forgiveness at all.
    • Loan amounts were originally not forgivable if the borrower lost full-time equivalent employees or seriously reduced the salaries or hourly wages of certain employees before June 30. The PPP Flexibility Act has extended that date to December 31, 2020. So as long as full-time employees or salaries or hourly wages are restored to February 15th, 2020 levels before December 31, 2020, there will be no reduction in forgiveness.
    • The PPP Flexibility Act also offers new relief to businesses who have lost full-time employees. Borrowers will not lose forgiveness if they have lost full-time employees from February 15 to December 31, 2020 if they, in good faith, can document:
        1. There was an inability to rehire individuals who were employees of the eligible recipient on February 15th, 2020,
        2. There was an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020, or,
        3. There was an inability to return to the same level of business activity as such business was operating at before February 15th, 2020 due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration.

One last change that comes with the PPP Flexibility Act is the ability to defer certain payroll taxes even if you’ve received a PPP loan. Originally, employers who were not borrowers of a PPP loan could defer 6.2% of their share of the 2020 Social Security tax until the end of 2021(50%) and 2022(50%). The PPP Flexibility Act allows for “double-dipping” in that borrowers of PPP funds can also participate in the payroll tax deferral regardless of whether any amount is forgiven.

Many questions still remain, and we are here to help. We can help you navigate the PPP loan process from calculating loan forgiveness to guidance on documentation and usage of funds. Read more about our PPP loan forgiveness services here.

Questions? Reach out to a Sweeney Conrad professional at or 425.629.1990.