Paycheck Protection Program Flexibility Act

Revisions to the Paycheck Protection Program Have Been Enacted

At Gettry Marcus CPA, P.C. we continue to stay apprised as to the status of the Paycheck Protection Program (“PPP”) loan updates.  Today, the President signed into law the Paycheck Protection Program Flexibility Act (“PPPFA”), which changes certain provisions of the CARES Act, which governs the PPP loan program. 

The changes include:  

  • PPP loans originating on or after the date of the PPPFA shall have the term of the loan revised from a 2-year term to a minimum of a 5-year term, up to a 10-year term;
  • PPP loans that originated prior to the passing of the PPPFA are governed by a 2-year term; however, lenders and borrowers could adopt the updated term length;
  • Covered Period of a PPP loan has been amended to the earlier of a 24 week period, beginning on the date of origination of the PPP loan or December 31, 2020;
  • Borrowers who received PPP loans prior to the PPPFA have the option to choose an 8 week Covered Period or a 24 week Covered Period;
  • During the period February 15, 2020 to December 31, 2020, loan forgiveness will be exempt from a reduction in the number of full-time equivalent employees if the borrower, in good faith, is able to document:
    • An inability to rehire individuals who were employees of the borrower on February 15, 2020;
    • An inability to hire similarly qualified employees for unfilled positions before December 31, 2020;
    • An inability to return to the same level of business activity as the borrower was operating at before February 15, 2020, due to COVID-19;
  • To receive loan forgiveness, a borrower shall use at least 60% of the PPP loan amount for payroll costs, and may use up to 40% for non-payroll costs;
  • PPP loan payback deferment extends until the amount of loan forgiveness has been determined after the Covered Period;
  • Should a borrower fail to apply for loan forgiveness on a PPP loan within 10 months after the last day of the Covered Period; the borrower will be required to make payments on the PPP loan beginning on the day that is not earlier than the date that is 10 months after the last day of the Covered Period;
  • PPP loan borrowers now eligible for the payroll tax deferral, which was also enacted in the CARES Act.

If you would like additional information please contact your Gettry Marcus Advisor or Gabe Shurek, or Nicholas Backmann the authors of this article.