• Larry Felts

Paycheck Protection Program Flexibility Act of 2020



Good news today for small businesses who were able to secure a PPP loan.


Senate passed House legislation to loosen restrictions on PPP small business loans. Below are some of the highlights.

  • Gives businesses 24 weeks to use the funds. If you received a loan before the bill’s enactment you may elect to continue using the 8-week covered period.

  • 60% threshold (instead of 75%) of the covered loan amount for payroll costs

  • Extends the deadline for the re-hire exception to December 31, 2020.

  • Repayment extends to 5 years from 2 years if the loan does not convert into a grant

  • Provides a Safe Harbor where the amount of loan forgiveness will not be reduced by a reduction in the number of full-time equivalent employees (FTEs) , if you are able to document in good faith.

The full Paycheck Protection Program Flexibility Act of 2020 can be viewed here.

Keep in mind this does NOT mean Forgiveness is automatic.


Forgiveness is not Guaranteed.


5 main steps to maximize forgiveness (from AICPA website):

  1. Track total eligible costs incurred and paid during the 8-week period following the loan funding

  2. Calculate any reduction in payroll > 25% of prior quarter

  3. Calculate any % decrease in FTEs from 8-week covered period versus the following periods.

  4. Calculate any adjustment because FTEs and salary/wages were restored by June 30.

  5. Calculate payroll costs for forgiveness floor.

The Forgiveness Application Form released by Treasury was 11 pages. It is longer than the average tax return for a small business

The Treasury and SBA will update the Form and Guidance once signed into law. However, the foundation for Forgiveness Calculation and Process will stay unchanged. 


Just like any legislative changes, it is highly possible this will only make things worse.


If you need help navigating these changing rules and regulations, don't worry. We understand how hard it is to keep up, so reach out and we'll keep up with the changes for you.


Full post here.