Senate Passes Paycheck Protection Flexibility Act Giving Employers More Time and Flexibility to Use Paycheck Protection Act Loans
On June 3, 2020 the Senate passed the Paycheck Protection Flexibility Act of 2020 (PFA), amending the Paycheck Protection Program (PPP), previously described here. President Trump is expected to sign the bill, which was passed by the House on May 28, 2020. The PFA expands the circumstances under which a PPP loan will be forgivable in two ways: (1) employers will have 24 weeks to spend the money from PPP loans, increased from 8 weeks; and (2) employers may spend only 60% of the loan on payroll costs, rather than 75%. This means that borrowers who received PPP loans before June 30, 2020 may continue use the money for allowable costs until December 31, 2020. In addition, employers will not jeopardize forgiveness of a PPP loan if they use up to 40% of the loan on allowable costs such as rent and utilities.
As explained in the Congressional Record, while the measure expands the period of time for employers to spend PPP loans to 24 weeks, this extension “does not authorize the Small Business Administration (SBA) to issue any new PPP loans after June 30, 2020.”