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PPP Flexibility

Updated: Jun 10, 2020

The PPP Flexibility Act includes the following provisions as compiled by the AICPA:

  • Allows forgiveness for expenses beyond the 8-week covered period to 24 weeks;

  • Extends the timeframe to restore employee levels to December 31, 2020;

  • Includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to Feb. 15, 2020 levels.

  • Increases the current limitation on nonpayroll expenses (such as rent, utility payments and mortgage interest) for loan forgiveness from 25 to 40 percent;

  • An update released today June 8, 2020, clarifies that the 60% threshold is not a cliff and that partial forgiveness is available even if businesses are not using 60% of the PPP funds for payroll.

  • Allows new borrowers five years to repay loan instead of two; existing PPP loans can be extended up to 5 years if lender and borrower agree; and

  • Ensures full access to payroll tax deferment for businesses that take PPP loans.

  • The program now has a firm date under which small businesses need to apply for PPP loan forgiveness — it must be within 10 months of the end of their covered spending period, whether that is eight weeks or 24 weeks. Any unforgiven amounts after that convert to a loan.

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