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Paycheck Protection Program Flexibility Act & What This Means For Forgivable PPP Loans


The Paycheck Protection Program Flexibility Act, a bipartisan bill that gives small businesses more time . . .

Courtesy of Shaun Petersen, 
Senior Vice President of Legal and Government Affairs, NIADA


The Paycheck Protection Program Flexibility Act, a bipartisan bill that gives small businesses more time to use the funds from the Small Business Administration's Paycheck Protection Program loans, was passed by the Senate in a unanimous voice vote June 3.

Two days later, President Trump signed it into law.

The bill, sponsored by Rep. Chip Roy (R-Texas) and Rep. Dean Phillips (D-Minn.), had previously been passed by the House of Representatives in a 417-1 vote.

The bill addresses concerns with forgivable PPP loans, which require businesses to use the money within eight weeks of receiving it to be eligible for full forgiveness. But because many businesses were shut down for months by government orders, they didn't have the time to do what was necessary to have their loans forgiven in that short span.

In addition to extending the time in which the loan funds must be used to qualify for full forgiveness from eight weeks to 24 weeks – through Dec. 31 – it also reduces the percentage of PPP funds required to be used for payroll from 75 percent to 60 percent.

Other provisions include eliminating the restriction limiting loan terms to two years, allowing businesses that receive PPP loans to also defer payroll taxes, and extending the deadline to rehire employees from June 30 to Dec. 31 to account for the effect of federally enhanced unemployment benefits.

The June 30 deadline for applying to receive a PPP loan was not changed.

The PPP, created by the CARES Act in late March, allotted $349 million in funding for forgivable loans of up to $10 million per borrower to help small businesses weather the COVID-19 crisis. After those funds were distributed in less than two weeks, Congress approved an additional $310 billion on April 21.

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