Paycheck Protection Program Flexibility Act (“PPPFA”)


The US Congress recently passed the PPPFA and it was signed into law yesterday.  Many of the provisions will assist HMA clients in obtaining increased forgiveness of the Payment Protection Program (“PPP”) Loans that they received beginning in mid-April. 

The following is a brief, very preliminary summary of many of the new/revised provisions.


Originally, businesses were required to spend and appropriately account for the PPP loan proceeds within 8 weeks. The new law extends that time period to 24 weeks.  This could make receiving loan forgiveness somewhat more likely.  The new law does not require businesses to wait for 24 weeks to apply for forgiveness.  They can still do so after eight weeks if they prefer.  What is still not clear is whether the maximum forgivable payroll amount of $15,385 ($100,000/52*8) is increased to the originally applied for maximum limit of $20,833.33 ($100,000/12*2.5).


Instead of requiring 75% of the loan proceeds to be spent on payroll related expenses, the new law reduces that amount to 60% which should help practices with high non-payroll overhead.


To obtain forgiveness, the original law required that all workers had to be rehired by June 30, 2020 for their salaries to count towards forgiveness. Under the new law, businesses now have until December 31, 2020 to rehire workers for their salaries to count towards forgiveness.


Since the purpose of the PPP loan was to keep people employed, to obtain forgiveness it required a business to demonstrate that it had the same number of FTEs during the look back period as it did during the comparative periods, or that it restored the number of FTEs by June 30, 2020. The only exception to this rule was if an employer could document in writing an attempt to rehire an employee who rejected this offer in writing. The new law extends the rehire date to December 31, 2020 and it adds some new additional exceptions for a FTE count.


The new law increases the repayment terms of portion of the loan that isn’t forgiven from 2 years to 5 years and defers the repayment and 1% interest charge until six months after the SBA makes a determination on forgiveness.


There are numerous outstanding questions and clarifications that we are expecting within the next few days and weeks.  Stay tuned…

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