What’s new in PPP? What you Need to Know About the New Paycheck Protection Program Flexibility Act

With the new changes signed into law last Friday, June 5th, and the release issued on Monday, June 8th, there are new and important updates to PPP that your organization needs to know. Here’s a brief summary prepared by your Galíndez, LLC team:


New Loan Forgiveness (LF) Application?

Yes, the Department of Treasury might be required to issue a new LF Application and Guidance.


New Elements as approved by:

  • Existing borrowers have the option to extend the 8 week period to 24 weeks.
  • New borrowers have a 24 week period covered period, expiring on Dec 31, 2020.
  • Currently, it’s 75% for payroll or there’s a reduction in loan forgiveness.
  • The 75% payroll expenditure requirement is reduced to 60%.


FTE (Full Time Employees):

  • FTE Reduction Safe Harbor rolled back from June 30th to December 31st
  • New exceptions for FTE Reduction calculation:
    • Could not rehire employees (for those on the payroll Feb. 15, 2020)
    • Could not find qualified employees
    • Unable to restore business activity to Feb. 15, 2020 levels due to COVID-19 related operating restrictions


Deferral of Taxes:

  • PPP Borrowers can now qualify for the deferral of employer’s share of payroll taxes available under the CARES Act
  • The deferral applies only to Social Security payments (6.2%)
  • 50% due on December 31, 2021, remainder due on December 31, 2022


Changes in Terms:

  • New loans have a 5-year maturity.
  • Existing loans can be modified to a 5-year maturity if the lender agrees Interest rate to remain at 1%
  • Loan payments deferred until SBA determines the amount of forgiveness
  • Had been a 6-month deferral
  • If the borrower doesn’t apply for forgiveness within 10 months of the end of the covered period, payments will be required



  • This legislation does not address the tax-deductibility of expenses paid with a forgiven PPP loan.
  • Also, note that there is another bill, the HEROES Act, still under Congress review, which might address this and other issues regarding this program.



If you need any help navigating these changes, your trusted team of advisors at Galíndez LLC is ready to provide assistance: info@galindez.com.

Find this and other articles in the latest issue of Galíndez Informs.