All information in this COVID-19 Response Resource issue is effective as of June 5, 2020.

On June 5, 2020, President Trump signed the Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) which modifies provisions of the Paycheck Protection Program (PPP), the most visible component of the CARES Act. 

The PPP loan program was designed to help small businesses weather the current economic storm by providing funds for businesses to use for payroll and other limited expenses.  Borrowers can obtain forgiveness of the loan amounts if they meet certain requirements.  Borrowers receiving PPP loans have voiced concerns that the forgiveness requirements were too strict, and the Flexibility Act loosens those restrictions. The changes in the Flexibility Act will effectively result in the loan being treated as a grant for most companies. 

PPP loan proceeds can only be spent on utilities, interest on mortgage and other loan obligations, payroll costs and rent. Borrowers receiving PPP loans originally had an eight-week period in which to spend the loan proceeds and then request forgiveness of the loan. Full forgiveness required a borrower to use at least 75 percent of the loan proceeds on payroll costs.

The Flexibility Act retroactively modifies these requirements. Borrowers now have 24 weeks in which to spend the loan proceeds and then request loan forgiveness. Further, the required allocation of payroll costs in the forgiveness amount is now only 60 percent as opposed to 75 percent. A borrower can opt-in to the eight-week period to accelerate its application for PPP loan forgiveness. 

Further, PPP borrowers are required to maintain their workforce in order to obtain loan forgiveness. The Flexibility Act loosens those requirements as well by stating that if an employer is unable to bring back workers because of regulations or directives from the federal government regarding sanitization, social distancing or other safety-related COVID-19 concerns, the employer’s loan forgiveness will not be reduced for failure to fully bring back its workforce.  The Flexibility Act also extends the “safe harbor” provision for employers to bring their workforces back from June 30, 2020, to Dec. 31, 2020.

In addition, the Flexibility Act extends the repayment period for PPP loan proceeds that are not forgiven from two years to five years. The Flexibility Act provides businesses significant options in managing costs and using PPP loan proceeds in a manner that is more beneficial to them (as opposed to the original intention of simply keeping employees on the payroll for eight weeks).

Finally, the Flexibility Act does not address whether borrowers are entitled to a tax deduction for the use of PPP loan proceeds that are forgiven. The Department of Treasury has determined that such a deduction is not permitted.      

If you have any questions regarding the Flexibility Act, please contact Sean Monson by calling (801) 536-6714 or send an email to or contact Ross Keogh at (406) 206-9710 or send an email to