Senate Passes PPP Flexibility Bill

Senate Passes PPP Flexibility Bill

Last night, the Senate passed the PPP Flexibility Act (H.R. 7010) with a unanimous voice vote. This is the same bill that passed the House last week, no changes were made by the Senate. The bill is expected to be signed into law by the President soon.


Bill Summary


The bill largely provides favorable changes for borrowers making it easier to achieve loan forgiveness. Changes from the bill include the following:


  • Extends 8-week covered period to 24-weeks
    • Borrowers may elect to use the original 8-week period instead
  • Changes the SBA rule which limited forgivable expenses to 75% of payroll costs and 25% of non-payroll costs to 60% of payroll costs and 40% of non-payroll costs.
    • This appears to create a “cliff” effect whereby a borrower MUST spend at least 60% of total loan proceeds on payroll costs in order to receive loan forgiveness
  • Replaces the 6/30/20 re-hire & pay restoration safe harbor date with 12/31/20
  • Expands exemption from FTE reduction if a borrower:
    • Is able to document an inability to rehire individuals or similarly qualified employees, or
    • Is able to document an inability to return to the same level of business activity due to compliance requirements from various organizations as a result of the COVID-19 pandemic
  • Allows borrowers to continue to defer employer share of social security taxes during 2020, even after receiving loan forgiveness
  • Adjusts the deferral period of the loan repayment from 6-months to a timeframe tied to when the borrower obtains forgiveness or 10 months after the covered period
  • Provides 5-year loan maturity date for new loans. Terms of existing loans may be changed by lenders and borrowers upon mutual agreement.


The SBA will have to revise the loan forgiveness application to account for these changes. Borrowers can also expect additional guidance on these provisions in the form of FAQs and/or IFR regulations.