Major Changes to the PPP Loan Program Approved by Congress

Author: Attorney Joseph A. Camilli

  1. The Paycheck Protection Program Flexibility Act of 2020

On June 3, 2020, the United States Senate passed the Paycheck Protection Program Flexibility Act of 2020 (“PPPFA”), a bi-partisan bill originally passed by the House of Representatives on May 28, 2020.  The PPPFA contains numerous significant changes to the widely utilized PPP loan program of the 2020 CARES Act. As of the date of this article the bill is awaiting President Trump’s signature.  Among its changes, the PPPFA would do the following:

  • Borrowers can apply for a PPP loan up to December 31, 2020 (assuming PPP funding remains available).
  • Instead of an eight-week period to spend PPP funds, borrowers would have 24-weeks after the PPP loan is approved or until the end of 2020 (whichever comes first) to spend PPP funds and qualify for loan forgiveness.
  • The requirement to spend 75% of a PPP loan on payroll costs for maximum loan forgiveness would be reduced to 60%.
  • Remove the limits on loan forgiveness for small businesses that were unable to rehire employees, hire new employees or return to the same level of business activity as before the virus.
  • For new PPP loans approved after the law is passed, the loan term (if not forgiven) would be five years instead of two. (Existing PPP loans would still have a loan term of two years.)
  • Allow small businesses to take a PPP loan and also qualify for a separate, recently enacted tax credit to defer payroll taxes which was previously prohibited to prevent “double dipping.”
  • Give small businesses more time to rehire employees or to obtain forgiveness for the loan if various regulatory or state agencies prevented the business from operating at the same capacity as it had before March 1.
  • Extend the period for when a business can apply for loan forgiveness, from within six months to within 10 months of the last day of the covered period, before it must start making interest and principal payments. Under the bill, PPP loan interest and payment of principal and fees will be deferred until the loan is forgiven by the lender.

How these new rules will be interpreted by the Treasury, Internal Revenue Service, Small Business Administration, etc. remains to be seen.  For example, as noted in the bullets above, the integration of this piece of legislation with the existing CARES Act raises questions about “double dipping” issues with respect to tax incentives.  It’s likely that the forms necessary to claim those incentives, already having been recently modified, may again need to be adjusted to account for this legislation.  Therefore, the passage of the PPPFA in no way suggests that any less care should be given to keeping informed of the legal and tax consequences of these regulations.

These changes have been advocated by small business groups to make the PPP more flexible and less complicated.  These changes drastically increase the chances that a PPP loan recipient’s loan will be completely forgiven.  Assuming the PPPFA becomes law, these changes are a win for small business owners.

This article was authored by Attorney Joe Camilli.  Attorney Camilli is a graduate of the Hamline University School of Law and practices business and employment law as part of Neider & Boucher, S.C.’s business team.  Attorney Camilli was recognized as a 2019 Up and Coming Lawyer by the Wisconsin Law Journal and is co-chair of the firm’s COVID-19 response team.


The guidance provided above is general in nature and readers are encouraged to reach out to Neider & Boucher, S.C., or to their own legal counsel to determine the applicability of these issues to their own personal and/or business needs.





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