PPP Loan Modifications- Update June 2020

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PPP Loan Modifications- Update June 2020

The Paycheck Protection Program keeps changing. With the passage of the Paycheck Protection Program Flexibility Act of 2020 last week, the Act has modified provisions in the original PPP loan and below is a brief rundown of those changes:

  1. New PPP borrowers will have 24 weeks after loan origination or until December 31, 2020, whichever comes first, to use loan proceeds on eligible business expenses. Current PPP borrowers can opt to extend the covered period determine for loan forgiveness from 8 weeks to 24 weeks or keep the original 8 week period.
  2. The rehiring safe harbor timeframe is extended to December 31, 2020, giving borrowers more time to restore their workforce levels and wages required for loan forgiveness. Prior deadline was June 30, 2020.
  3. PPP borrowers are now required to use at least 60% of the loan proceeds on payroll costs. Allowing borrowers to use a max of 40% of the loan proceeds on eligible non-payroll expenses.
  4. New PPP borrowers have up to 5 years to repay the loan. Existing PPP loan borrowers can extend the repayments terms up to 5 years if there’s a mutual agreement with the lender. The loan interest rate remains the same at 1%.
  5. Two new exceptions will help borrowers achieve PPP loan forgiveness:
    1. Borrower must document the inability to rehire individuals who were employees as of February 15, 2020 and the inability to hire employees of similar qualifications to fill positions on or before December 31, 2020.


  1. Borrower must document the inability to return to the same level of business activity as before February 15, 2020 to comply with standards, restrictions, and or safety guidelines related to COVID-19.
  1. PPP borrowers are allowed to defer the employer’s share of social security tax on FICA tax and the employer’s share of social security portion of RRTA tax that would normally be deposited/paid between March 27 and December 31, 2020, with 50% due in 2021 and the remainder due in 2022.

We encourage you to review the terms of your PPP loan and talk to your lender as well as contact Morrison Clark & Company should you need additional guidance.