Congress Passes the Paycheck Protection Program Flexibility Act
On June 5, 2020, the president signed into law the Paycheck Protection Program Flexibility Act (PPPFA). The act provides greater flexibility in how borrowers may use Paycheck Protection Program loan funds and receive loan forgiveness.
Borrowers that have already received PPP funds will have the option to use the 24-week covered period or keep the covered period at the original eight-week period previously set forth under the PPP.
The PPPFA also eliminated the SBA rule that no more than 25 percent of the loan forgiveness amount may be used for non-payroll costs. Instead, the PPPFA provides that in order to receive loan forgiveness, at least 60 percent of the loan amount must be used on payroll costs and no more than 40 percent may be attributable to non-payroll costs.
In addition, the rehiring safe harbor period also has been extended to December 31, 2020. Under the Flexibility Act, borrowers now have until December 31, 2020 to rehire employees or restore payroll levels without incurring any reduction in the forgiveness amount.