• Amber Thomas

Changes Coming to SBA’s Paycheck Protection Program

The Paycheck Protection Program Flexibility Act (PPPFA) was signed into law on June 5, 2020 after Congress approved the measure with a nearly unanimous vote. Rep. Thomas Massie (R-Ky.) was the lone dissenter. The legislation makes several significant changes to the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) to improve accessibility and flexibility of loans issued under the program.


The PPP is designed to incentivize small businesses to keep all their workers during the COVID-19 crisis. The SBA forgives the loans if borrowers maintain their payrolls and use most of the money for payroll, rent, mortgage interest, or utilities. The PPP has had its share of challenges. Funding ran out days after the program launched, and some companies received loans that shouldn’t have. New funding was added in April and loans continue to be in high demand, but meeting the requirements for loan forgiveness has proved difficult for many small businesses. The PPPFA addresses this problem by providing greater accessibility and flexibility to the program. 


The PPPFA gives companies much more flexibility with loan funds by changing the 75/25 rule, the requirement that borrowers use at least three-quarters of the loan for payroll costs and no more than 25% on other costs to be eligible for loan forgiveness. The new ratio for forgiveness is 60/40, with at least 60% of the loan to be spent on payroll and no more than 40% on other costs.


The new law also gives small businesses more time to use PPP loans by extending the eight-week period to 24 weeks in which they must use the money to qualify for loan forgiveness. This extension is essential, as some businesses haven’t even reopened yet. 


AMT joined a coalition led by the U.S. Chamber of Commerce urging these critical changes to the program. The coalition sent a letter to the congressional leadership, Treasury secretary, and SBA administrator in May requesting Congress to act.