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On June 3, 2020, the Senate passed H.R. 7010, Paycheck Protection Program Flexibility Act of 2020, and President Trump is expected to sign it into law quickly. This Act makes several favorable changes to the PPP, which should allow more businesses to fully use their loan proceeds for qualified purposes and potential forgiveness. Key provisions in the law include: 

  • Extends loan maturity to five years for any portion of the PPP loan that is not forgiven (up from two years). This change would apply only to PPP loans received after the bill’s enactment date; however, existing PPP loans could be modified to reflect the new maturity terms by agreement with the lender and borrower
  • Extends program term to December 31, 2020, from June 30, 2020, application must still be submitted by June 30, 2020
  • Extends covered period to the earlier of 24 weeks after loan issuance or December 31, 2020. Borrowers with existing loans could elect to retain the existing eight weeks 
  • Extends safe harbor restoration deadline date provisions (full-time equivalent (FTE) and salary/wage reduction) to December 31, 2020, from June 30, 2020
  • Reduces the minimum required spend for payroll costs for loan forgiveness purposes to 60 percent from 75 percent
  • Creates a new safe harbor provision to remove the FTE reduction in forgiveness. Borrowers must be able to document either of the following:
    • Inability to rehire individuals who were employees on February 15, 2020, and inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020, or
    • Inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements established or guidance issued by the secretary of the U.S. Department of Health and Human Services, director of the Centers for Disease Control and Prevention or the Occupational Safety and Health Administration during the period beginning March 1, 2020, and ending December 31, 2020, relating to the maintenance of standards for sanitation, social distancing or any other worker or customer safety requirement related to COVID-19
  • Defers principal and interest payments until the U.S. Small Business Administration (SBA) remits the loan forgiveness amount to the lender (currently only a six-month deferral period)
  • Loan forgiveness must be requested by the borrowers within 10 months of the last day of their covered period or payments would begin at that time
  • Removes restriction on a borrower’s access to payroll tax deferment (previously, borrowers could only take advantage of the payroll tax deferral provision until a borrower receives PPP loan forgiveness)

Further administrative updates are expected by the SBA through interim final rules or updates to frequently asked question documents.

Webinar in Process
BKD Trusted Advisors™ James Anderson, Robert Conner and Tad Goodenbour will host a webinar updating the webinars held on May 18, 2020. Planning is still in process, but it is tentatively scheduled on Monday, June 8. Watch our BKD Thoughtware® for the exact date and time.

BKD will continue to follow this developing situation. As with most topics related to COVID-19, changes are being made rapidly. Please note that this information is current as of the date of publication. Visit BKD’s COVID-19 Resource Center to learn more. If you have questions about these changes, contact your BKD Trusted Advisor today.

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