Senate Passes Paycheck Protection Flexibility Act

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On Wednesday night, the Senate voted unanimously in favor of the Paycheck Protection Flexibility Act. This new legislation makes key adjustments to the timeline for spending Paycheck Protection Program (PPP) funds and revises how loan recipients are required to allocate the money.

Here is a brief overview of the key provisions contained in the bill:

  • Loan recipients will now have 24 weeks to spend the funds versus the previous eight-week period. For loans originated prior to the enactment date, borrowers can elect to continue to use an eight-week covered period.
  • The percentage of the loan money required to be devoted to payroll expenditures has been reduced from 75% to 60%. This item may come with a new catch—if a borrower fails to spend at least 60% of the loan money on payroll, then the entire loan becomes unforgivable. The Senate plans to pursue a technical correction to fix this item if it is determined that it is needed.
  • The minimum term period for PPP loans is extended from two years to five years for new PPP loans. Lenders and borrowers can mutually agree to extend the term on any existing PPP loan. The deferral period for loan principal and interest repayments has also been changed. Loan principal and interest payments will now be scheduled to commence on the date on which the loan forgiveness application is submitted to the lender.
  • PPP loan recipients whose loans are forgiven may delay payroll tax payments (the employer’s share of FICA payroll taxes) for two years. Half of the taxes are due in 2021 and the other half in 2022.
  • The deadline for rehiring employees and restoring wages to pre-pandemic levels is extended from June 30, 2020 to December 31, 2020. This could mean that applications for loan forgiveness will need to be delayed until after December 31, 2020 to the extent a borrower needs to rely on the FTE or salary restoration provisions of the CARES Act to avoid loan forgiveness reductions.
  • Loan recipients have more leeway on loan forgiveness if they can provide evidence that they were unable to recall a portion of their workforce or that it was not possible to reopen their business in a way that complies with safety standards.

The bill now heads to the President, who is expected to sign it.


The information and tips noted above are intended as general guidelines only. The provisions within the CARES Act are complicated with many questions still unanswered. Every client situation is unique and ideas expressed in this article should not be considered a substitute for professional advice. Opinions expressed in this article are subject to change as interpretations are clarified and additional guidance is issued. Please call our office if you have questions regarding the CARES Act or any other recent legislation.