PPP Loan Forgiveness

We know you are chomping at the bits to get your PPP loan forgiven, so we wanted to provide updates and information surrounding the CARES Act and the new PPP forgiveness act.

We have seen there is a holding period where forgiveness applications are not being accepted by most banks quite yet.

How to get your PPP loan forgiven


On June 5, 2020, the President signed the Paycheck Protection Program Flexibility Act of 2020. The Flexibility Act modifies several aspects of the forgiveness of paycheck protection program loans as designed by the CARES Act that was passed and signed into law back in late March.

This is great news for most as some impactful changes have been made.

Key Changes in the PPP Flexibility Act:

  • Current PPP borrowers can choose to extend the eight-week period to 24 weeks or keep the original eight-week period. New PPP borrowers have a 24-week covered period, but the covered period does not extend beyond December 31, 2020.
  • Borrowers must now spend AT LEAST 60% of the loan on payroll or none of the loans will be forgiven! This percentage was set at 75% before the passing of this Act. Currently, a borrower is required to reduce the amount eligible for forgiveness if less than 75% of eligible funds are used for payroll costs, but forgiveness isn’t eliminated if the 75% threshold isn’t met.
  • Borrowers can use the 24-week period to restore their workforce and wages to the pre-pandemic levels required for full forgiveness. This must be done by December 31, granting more time than the previous deadline of June 30.
  • Two new exceptions allowing borrowers to achieve full loan forgiveness even if they don’t fully restore their workforce are now in effect. Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good-faith offers to be rehired at the same hours and wages as before the pandemic. This allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to February 15, 2020, levels due to COVID-19 related operating restrictions.
  • New borrowers now have five years to repay the loan instead of two. Existing PPP loans can be extended up to 5 years if the lender and borrower agree. The interest rate will remain at 1%.
  • Borrowers applying for PPP forgiveness are now allowed to take advantage of the payroll tax deferment offered under the CARES Act.

If you have questions or need more information, contact us.