All You Need to Know about the PPP Flex Act

Since the COVID-19 pandemic hit the United States, Congress has passed a number of bipartisan bills aimed at helping the economy in a number of ways. One of the most recent is the Paycheck Protection Program Flexibility Act (PPPFA), which was signed by President Trump on June 5th.

This article will answer all your questions about the PPPFA.

Why was the PPPFA created?

The PPPFA was created as a response to concerns that arose regarding the initial Paycheck Protection Program Act, which provided forgivable loans to small businesses. As often happens with legislation, the reality of the situation being addressed brought about a number of concerns that needed to be addressed. The PPPFA addresses these concerns, most importantly, extending and expanding certain terms to make it more feasible for businesses to qualify for forgiveness.

How does the PPPFA amend the amount of loans needed for payroll?

The initial PPP bill required that businesses use 75% of their loans for payroll, an effort to slow the expansion of Americans being laid off. However, with many businesses unable to reopen at full capacity, this became a concern as qualifying for loan forgiveness came with strict rules. The PPPFA amended this requirement, lowering it to 60%.

This means that a lesser amount will need to be spent on payroll. If you have a practice with high operating expenses, such as rent/practice loan, then you can allocate more of your PPP funds towards these expenses and still be eligible for forgiveness, as long as 60% of the funds are used for payroll.

I am an independent contractor, and I have zero expenses, besides payroll costs. Can I use the entire PPP loan for my payroll?

Yes, of course! Don’t overthink it. As long as 60% of the PPP funds are used for payroll, then you are eligible for 100% forgiveness. Keep in mind; you cannot pay yourself more than $100,000 annual income. However, bonus pay is considered one part of total compensation, which cannot exceed the annualized rate of $100,000.

Were there changes to employee compensation eligible or forgiveness?

No, these amounts remained the same. Employee compensation that can be forgiven is capped at $100,000 per employee. Anything over the annualized $100,000 income will not be forgiven

How did the PPPFA alter the types of expenses that the loans can be used for?

Simply put, it didn’t change this. While up to 40% of the loans can now be used for expenses other than payroll, the types of expenses remained the same, including things like rent, mortgage payments, utilities, and loan interest.

Can I use my PPP funds to pay for PPE or equipment?

Currently no. We recommend using your EIDL loan or grant to pay for business supplies and inventory such as: personal protection equipment, expenses for remote working, and other business needs. Keep an eye out for a possible expansion to eligible PPP expenses.

Did the PPPFA address concerns with the timeline to spend loan funds?

Yes, this was one of the major aspects of the bill. Originally, companies had eight weeks from the date they received the loan to spend the money. However, this led many organizations to have to pay workers who were still sitting at home awaiting the economy to reopen. Thus, the PPPFA extended this period to 24 weeks, making it more likely that companies will be able to spend funds while they are open and operational.

When is the deadline for loan recipients to rehire workers?

The original deadline to rehire workers was June 30th. However, this is likely not feasible in some states and for some industries due to the stay at home order still in effect. Thus, the PPPFA pushed this deadline back to the end of the year, December 31st.

What happens if my business is unable to rehire workers?

Originally, the bill required a business to rehire the same number of full-time staff or full-time equivalents that were laid off with the exception of documenting an employee who rejected a rehire offer. However, the PPPFA expands this exception in two important ways. First, a business can still have the loan forgiven if they demonstrate an inability to find a similarly qualified employee before year-end. Secondly, they can have the loan forgiven if they demonstrate the inability to return to the same level of productivity by year-end. The latter is important for businesses that may see their scope reduced by state regulations or changes in industry demand.

I am nearing the end of my 8 week period, do I need to wait 24 weeks to apply for loan forgiveness?

No. The PPPFA does not require businesses to wait for 24 weeks to apply for forgiveness. You can apply for forgiveness right away if you prefer. Please contact your lender for the updated forgiveness application.

How long do I have to repay my loan if it isn’t forgiven?

If a business does not qualify for forgiveness, the PPPFA has extended the duration of repayment from two years to a minimum of five years at a 1% fixed rate, providing greater financial flexibility for organizations that find themselves in this situation.

When will my first loan payment be?

The Flexibility Act allows PPP borrowers up to 10 months from the date their covered period ends to apply for loan forgiveness. Remember, the Flexibility Act has extended the covered period to 12/31/2020.

If there are any portions of your loan that are not “forgivable”,  the earliest date for commencement of payments of principal, interest and fees can be on 11/1/2021 (which is 10 months after the last day of the covered period). 

Can I defer my payroll taxes?

Yes, The CARES Act provides employers the ability to defer certain payroll taxes that otherwise would be payable before January 1, 2021, to be paid 50% by December 31, 2021, and the remainder by December 31, 2022.


In conclusion, the CARES Act and its PPP component are constantly evolving and changing.  We are experiencing an unprecedented time in US history.  Keep checking back with us to get up to date information on everything related to the CARES Act. 

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About Julie Phan

Dr. Phan is the co-owner (along with her husband, Toan Nguyen OD) of a highly successful optometry private practice in San Marino CA while also running a Sam’s Club sublease in nearby San Bernardino. Always the entrepreneur at heart, Dr. Phan also invests in rental properties. Through leveraging a talented team of realtors, contractors, and property managers spanning five states, Dr. Phan has steadily built a real estate business that generates consistent passive income. Along the way, she hopes to inspire friends, family, and colleagues about the value of real estate investment so they can work towards their own financial independence. Follow Julie's REI Journey on IG @ house_hustle at

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