Paycheck Protection Program Flexibility Act Summary
Updated 06/08/2020
On June 5, 2020, the President signed into law the Paycheck Protection Program Flexibility Act (PPP Flexibility Act), which is intended to provide more flexibility to borrowers regarding use of loan funds under Paycheck Protection Program. In general, the PPP Flexibility Act makes the following changes:
- Extends the loan term for PPP loans from 2 years to a minimum of 5 years;
- Adds new employee rehiring exemptions that would allow borrowers to avoid reductions in forgiveness;
- Extends the covered period for forgiveness from 8 weeks to 24 weeks after origination or December 31, 2020, whichever is earlier;
- Relaxes the percentage of PPP loan funds that must be used on payroll costs from 75% to 60%;
- Extends the deferral period for PPP loans from 6 months until when loan forgiveness is remitted by the SBA to the lender;
- Imposes a deadline for borrowers to submit PPP loan forgiveness applications; and
- Allows PPP borrowers to take advantage of the tax deferral in Section 2302(a)(3) of the CARES Act
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