Advantages of the Paycheck Protection Program Flexibility Act

The Paycheck Protection Program Flexibility Act (PPPFA) provides additional aid for businesses which will help them overcome financial problems caused by the pandemic. It amends the Paycheck Protection Program (PPP) and provides better benefits.

The Act allows borrowers more freedom in how and when loan funds are spent while retaining the possibility of full forgiveness.

Borrowers now have 24 weeks to spend loan proceeds instead of 8 weeks. Previously under the PPP rules, borrowers had eight weeks from the time they received the first loan installment to spend the funds. The Act lets them extend that period to 24 weeks, but not beyond Dec. 31, 2020. Borrowers still have the option to keep the original eight-week spending period if they already had their loan before the PPP Flexibility Act.

The Act also reduces mandatory payroll spending from 75% to 60%. The original PPP loan rules required that 75% of any forgiven amount had to be spent on payroll costs. The Flexibility Act reduces required payroll expenditures to 60% of the loan amount with up to 40% of the loan amount used for mortgage interest, rent, or utility payments to obtain full loan forgiveness of that amount. Additionally, part of the loan can be forgiven if the borrower maintains the same 60/40 ratio for the amount forgiven. This change resulted from many business complaints that their payroll costs went down as employees were laid off but fixed costs like rent did not.

The time allowed to pay off the loan has been extended to five years. The PPP had required the pay off to be made in two years.

The Act allows businesses to delay paying payroll taxes even if they took a PPP loan.

Borrowers can now use the new 24-week period to restore their workforce to pre-COVID-19 levels in order to obtain full forgiveness. The new deadline to achieve this is Dec. 31 instead of the previous deadline of June 30.

If you are sole proprietor and have no employees, the new 24-week rule allows you to achieve 100 percent forgiveness when you pay yourself the total loan amount within 10.8 weeks of the date you received your loan proceeds.

By simply spending the loan proceeds on yourself during the first 10.8 weeks, you achieve total forgiveness. With the 10.8 week program you don’t have to spend money on rent, utilities, or interest. You can simply write checks to yourself from your business checking account to qualify.

David Zubler is a tax accountant and Enrolled Agent representing clients before the IRS with over 25 years of tax experience. He is the author of four tax books and is the founder and president of Your Tax Care. The company provides business and tax education to the public at its website, David can also be contacted by email at