New PPPFA adds flexibility, time for employers still trying to reopen

With surprising speed and bipartisanship, Congress passed and President Trump recently signed the Paycheck Protection Program Flexibility Act (PPPFA). The amendment to the hastily crafted PPP in the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides 24 more weeks for employers to use the forgivable loans, extends the repayment period (if needed) to five years, and reduces the amount of the loan that must be devoted to employee pay from 75% to 60%. The measures will make loan forgiveness a more likely outcome for more employers.

More time to rehire workers

One of the most significant changes to the PPP extends the time during which employees must be rehired. The original program required all workers to be rehired by June 30, 2020, in order for their salaries to count toward loan forgiveness. It was an overly optimistic view of when businesses would reopen and rebound. As it happens, most companies wouldn’t need a full complement of workers by June 30 and would be continuing to pay some idle workers or laying off others as the date approaches.

Under the amended law, employers now have until December 31, 2020, to rehire workers so the salaries can count toward forgiveness. It isn’t clear how employers are supposed to stretch the PPP loan to cover employee pay for six more months.

More time to use PPP funds