Significant Update on The Paycheck Protection Program 

The Paycheck Protection Program (PPP) Flexibility Act of 2020 (H.R. 7010) has passed both the House and Senate and is currently awaiting signature from the President. H.R. 7010 will give some much-needed breathing room to businesses who have received the PPP loans as our country slowly begins its process of opening up economic operations.

Many businesses are nearing the end of their eight-week period to use the PPP funds; however, H.R. 7010 extends that window of time to 24 weeks, or December 31, 2020. PPP borrowers can choose to extend the eight-week period to 24 weeks, or they can keep the original eight-week period. Additionally, the Safe Harbor guidelines were changed as well, allowing business owners to bring staff back by December 31, 2020, rather than by June 30, 2020. Other key items in H.R. 7010 are:

  • The PPP funds to be used on payroll have dropped from 75% to 60% for forgiveness consideration. With this change if payroll expenditure isn’t at least 60%, none of the loan will be forgiven. Congress has indicated they may make a technical correction relating to this.
  • If all, or a portion, of a PPP loan is not forgiven, the borrower will have five years to repay the loan.
  • Allow employers to defer paying the 6.2% OASDI taxes even if they are receiving PPP loan forgiveness.
  • Increased 25% limitation on non-payroll expenses qualifying for forgiveness to 40%.
  • Payments of principal and interest on the PPP loan are generally delayed until determination/acceptance for forgiveness by lender. If borrower fails to apply for forgiveness, then payments will begin ten months from the end of the 24-week period.

The H.R. 7010 Act language also states that from February 15, 2020, to December 31, 2020, the amount of loan forgiveness will be determined without regard to a proportional reduction in the number of full-time equivalent employees if an eligible recipient in good faith is able to document:

  • Inability to rehire employees who were on staff before February 15, 2020.
  • Inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020.
  • Inability to return to the same level of business activity as it had before February 15, 2020, due to compliance with government and CDC guidelines.


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