Coronavirus News

Congress passes PPP Flexibility Act with significant modifications to original PPP

Congress recently passed the Paycheck Protection Program Flexibility Act of 2020 (PPPFA). The President is expected to sign the bill into law in the coming days. The PPPFA makes some significant modifications to the Payroll Protection Program (PPP) passed earlier this year as part of the CARES Act.

  • For purposes of determining the amount of a PPP loan that is eligible for forgiveness:
    • The period for measuring qualified expenses has been expanded from 8 weeks to 24 weeks from the date the loan proceeds are received.
    • Borrowers can elect to continue to use 8 weeks as the measurement period.
    • The expansion of the forgiveness period from 8 weeks to 24 weeks also applies to the requirement that borrowers must maintain a full-time equivalent (FTE) headcount equal to or in excess of pre-COVID-19 levels. Therefore, if the 24 week period is used, the borrower must maintain the FTE headcount for all 24 weeks or the amount that is eligible for forgiveness will be reduced.
  • Borrowers are now required to use at least 60% (down from 75% originally) of the loan proceeds on payroll costs in order to be eligible for forgiveness. In contrast to the 75% requirement where the amount eligible for forgiveness would be reduced if this threshold was not met, the 60% threshold is an all or nothing threshold. In other words, if at least 60% of the loan proceeds are not used for payroll costs, none of the loan will be forgiven.
  • Additional exemptions for failure to meet the FTE headcount have been added.
  • The CARES Act gave employers the ability to defer the employer portion of Social Security taxes on wages paid from March 28 through December 31 of 2020. Employers are not required to pay these taxes until December 31, 2021 (50%) and December 31, 2022 (50%). However, employers could not defer these taxes on wages paid after they received notification from their lender that their PPP loan would be forgiven. The PPPFA removes this requirement. Employers can now defer these taxes on all wages paid from March 28 through December 31, 2020; regardless of when their PPP loan is forgiven.

For guidance on how the PPPFA affects your business, contact a Dugan & Lopatka professional at (630) 665-4440 or  


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