Paycheck Protection Program Flexibility Act

Updated: June 12th, 2020 at 6:00 p.m.

The Paycheck Protection Program (PPP) came into effect after the CARES Act (Coronavirus Aid, Relief, and Economic Security) was signed into law on March 27th, 2020. 

On May 26th, 2020 the Paycheck Protection Program Flexibility Act of 2020 was introduced in the House of Representatives. On June 5th, 2020, after being signed by the President, this became Public Law No: 116-142 (

The Paycheck Protection Program Flexibility Act of 2020 establishes a, “minimum maturity of five years for a paycheck protection loan with a remaining balance after forgiveness” ( 

It also extended the covered period for which the loan recipient can use their funds. This extension went from eight weeks to 24 weeks when the funds can be used for specific expenses, while the recipient may remain eligible for forgiveness of the loan.  

Additionally, the bill also raises the non-payroll portion of, “a forgivable covered loan amount from the current 25% up to 40%” (

According to the National Law Review, this bill also addresses rehiring employees. Some employees are unwilling to go back to work for various reasons and some are unable due to certain laws in different states. 

The borrower’s loan forgiveness amount will not be reduced if;

Borrower made a good faith, written offer to rehire such employee (or, if applicable, restore the reduced hours of such employee) during the covered period.

Offer was for the same salary or wages and same number of hours as earned by such employee in the last pay period prior to the separation or reduction in hours.

Offer was rejected by such employee.

Borrower has maintained records documenting the offer and its rejection.

Borrower informed the applicable state unemployment insurance office of such employee’s rejected offer of reemployment within 30 days of the employee’s rejection of the offer (

The 75% of the PPP was to be used for covering payroll costs. However, with the Paycheck Protection Program Flexibility Act, in order to have the PPP forgiven, the minimum has been decreased to 60% of PPP funds needing to be allocated for payroll costs.

The last day that a PPP loan can be made is June 30th, 2020 (

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