Insight

Special Alert | Paycheck Protection Program Flexibility Act

Congress passes bill easing PPP forgiveness

Amy S. Matsuo

Amy S. Matsuo

National Leader, Regulatory Insights, KPMG US

+1 919-664-7302

Congress passed the Paycheck Protection Program Flexibility Act (H.R. 7010) easing provisions in the PPP related to forgiveness. Key changes:

  • Extend from two to five years the minimum maturity of any remaining loan balance after an application for loan forgiveness.
  • Extend the “covered period” (i.e., when costs that are eligible for forgiveness must be paid or incurred) from 8 weeks to 24 weeks (or December 30, 2020, whichever is earlier).
  • Reduce from 75 percent to 60 percent the amount of loan proceeds that must be used for payroll costs although the remainder must continue to be allocated to interest on mortgages, rent, and utilities.
  • Permit an exemption from reductions in loan forgiveness amounts based on reductions in full-time equivalent employees if the borrower, in good faith, documents an inability to return to the same level of business activity due to standards for sanitation, social distancing, or other worker or customer safety requirement established by HHS, the CDC, or OSHA.
  • Allow deferral of payments until the amount of forgiveness is remitted to the lender.

The provisions of the bill become effective upon enactment and will apply to all loans made under the PPP. SBA guidance to implement the forgiveness changes will be forthcoming.

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