Cherylyn Harley LeBon is a partner and Ithi Joshi is an associate for Dunlap Bennett & Ludwig, practicing out of the Tysons Corner office.

Please see Part 1 and 2 of DBL coverage of the PPP:

[Jun. 18, 2020 Tysons Corner] The Paycheck Protection Program Flexibility Act (the “PPP Flex Act”) was signed into law on June 5, 2020. This new law provides additional guidance and modifies the Paycheck Protection Program (“PPP”) as part of the larger Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The new legislation gives small businesses the flexibility to keep employees on their payroll and ensure continued business operations as the country slowly reopens. The PPP Flex Act is expected to help relieve the burden on those small businesses that remain closed and need more than eight weeks to reopen, as initially estimated by the first PPP round of funding.

The PPP Flex Act makes the following modifications to the PPP:

  • Lowering the previous 75/25 requirement of funding where 75% of the PPP loan must be used for payroll costs and 25% for all non-payroll expenses. The PPP Flex Act changes the requirement so a borrower seeking loan forgiveness can use a minimum of 60% of a loan towards payroll costs. If less than 60% of the loan amount is used for payroll costs, the borrower will only be eligible for partial loan forgiveness.
  • Extending the time borrowers have to spend the funds to the earlier of 24 weeks from the date the loan was received or December 31, 2020. For example, if a borrower receives a PPP loan on June 30, 2020, they will have until December 31, 2020 to spend the funds. This extension provides more time to those borrowers who have been unable to reopen their businesses due to COVID-19 but need the PPP funds to do so.
  • Providing an exemption to reductions in loan forgiveness if the borrower is 1) unable to rehire former employees and is unable to hire similarly qualified employees by December 31, 2020, or (2) unable to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19. The borrower must be able to document and demonstrate the inability to rehire employees before electing the exemption.
  • For borrowers who do not apply for forgiveness, extending the deferral period for principal and interest payments to 10 months after the end of the borrower’s loan forgiveness covered period (the last day of the covered period). This date will be 8 weeks after loan disbursement, 24 weeks after disbursement, or December 31, 2020, depending on the date the loan was made. For borrowers who do intend to apply for forgiveness, payment of principal, interest, and other fees will be deferred until the date on which the amount of loan forgiveness is repaid to the lender.
  • Increasing the maturity date of PPP loans that are approved by the SBA on or after June 5, 2020 to five years. This means borrowers have five years from the date of the loan to repay any portion of the loan that is not forgiven. Note that the new maturity date only applies to loans made on or after June 5, 2020.
  • Permitting businesses that receive loan forgiveness to defer some payroll taxes and delay payment of the employer portion of social security taxes for payroll paid through the end of 2020.
  • Giving the Small Business Administration the right to review and audit all loans made regardless of the date and amount of the loan for up to six years.
  • Finally, the PPP Flex Act confirms that the last date to apply for a PPP loan is June 30, 2020 (Over $130B is still up for grabs so contact your financial institution today to apply).

Contact the DBL team at 800-747-9354 or email

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Posted in: Business Law

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