Cares Act: The Sba's Paycheck Protection Program—Congress Passes The Paycheck Protection Flexibility Act

On June 5, 2020, President Trump signed into law the Paycheck Protection Program Flexibility Act of 2020 (the Act). On June 3, 2020, Congress passed the Act, which eases restrictions on Paycheck Protection Program (PPP) loans and gives business owners more flexibility in spending loan funds. The following are key provisions of the Act:

• The covered period during which businesses have to use the funds in order to be eligible for forgiveness is extended from 8 weeks to the earlier of (i) 24 weeks or (ii) December 31, 2020.
• Borrowers must spend at least 60% of total loan proceeds on payroll in order to be eligible for forgiveness. While the Act lowered the requirement from 75% to 60%, it also made the payroll expenditure requirement a cliff, meaning that borrowers must spend at least 60% on payroll or none of the loan will be forgiven. Prior to the Act, a borrower was required to reduce the amount eligible for forgiveness if less than 75% of eligible funds were used