President Signs Paycheck Protection Program Flexibility Act (PPPFA) of 2020

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On Friday, the President signed the Paycheck Protection Program Flexibility Act of 2020 (“PPPFA”).  The PPPFA will provide flexibility to borrowers to maximize the benefits provided by the Paycheck Protection Program (“PPP”) established as part of the CARES Act. This Act helps bring all borrowers of the PPP loan closer to obtaining full loan forgiveness. This Act is what we have been waiting and hoping for which helps all main street businesses with much needed working capital with little to no repayment.


  • The final date on which PPP loans can be made would be extended from June 30, 2020 to December 31, 2020. Please note that Congress might correct this again by pushing that date back to June 30 as the last day for accepting and approving PPP loans. We recommend all clients to apply before June 30th.
  • The covered period during which the PPP loan proceeds can be used is extended from eight weeks to 24 weeks from the date of origination (but not later than December 31, 2020). This greatly increases loan forgiveness opportunities for the hardest hit businesses due to state mandated closures.
  • Businesses that received loan proceeds prior to the date of enactment of the PPPFA may elect to end the covered period eight weeks from the date of origination of the loan.
  • Businesses will have to evaluate which period of time is more beneficial since the 24 weeks will require them to maintain payroll levels for an additional 16 weeks, which may impact the amount of loan forgiveness.
  • The Act extends the safe harbor date from June 30, 2020 to December 31, 2020 to restore salary and wage levels.
  • PPPFA adds additional safe harbors allowing businesses to achieve full loan forgiveness even with reductions in FTEs due to
    • Documented inability to rehire individuals who were employees as of February 15, 2020 and cannot hire qualified employees for unfilled positions on or before December 31, 2020.
    • Documented inability to return to the same level of business activity as that business was operating at before February 15, 2020, due to compliance with requirements established by various government agencies during the period from March 1, 2020 through December 31, 2020.
  • Changes the 75/25 split for payroll and eligible costs, respectively, to a 60/40 split. This change will help the hardest hit businesses in retail and restaurant that cannot reach the previous 75% level.
  • The deferral period on which PPP loan payments start have been extended from six months to ten months.
  • Minimum maturity of PPP loans is extended from two to five years. This applies only to PPP loans issued on or after the date of enactment of the PPPFA.  However, nothing is prohibiting lenders for existing PPP loans prior to the PPPFA to modify the maturity terms to the five-year term.