Fed Loosens PPP Rules

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PPP loan information

If you received a Paycheck Protection Program (PPP) loan and want more flexibility in how you use it, you are in luck.


Here, according to a Forbes’ summary, are the basics of the bill, called the Paycheck Protection Program Flexibility Act (PPPFA).

The Amount That Must Be Devoted to Payroll Moves to 60 Percent

Prior to the new rules, a business had to spend 75 percent of their PPP money on payroll.  That is reduced to 60 percent so businesses can spend more of the money on other business expenses.

The Time Period Required to Use the Funds Moves to 24 Weeks

Originally, businesses were required to disburse the funds within 8 weeks from the date they were received to get the full loan forgiveness. Now they are free to conserve the monies and spend it over the course of the remainder of the year.  But they can still apply for loan forgiveness after the original 8 weeks if they wish.

The New Deadline to Rehire Workers is December 31, 2020

Now, instead of being forced to rehire workers while the business was closed or only partially open, businesses have until the last day of the year to rehire their workers to get loan forgiveness.

New Exceptions to Rehire Requirements

The original PPP required a business to keep the same number of employees on the payroll.  They had to rehire the same number of full-time employees (or the full time equivalent when you add up part-time employees).  The only exception was if the employer could document in writing that he tried to rehire the worker and they refused.

The new law allows more exceptions for a reduced employee count. A small business can still receive forgiveness on payroll amounts if it:

  • Is unable to rehire an individual who was an employee of the eligible recipient on or before February 15, 2020;
  • Is able to demonstrate an inability to hire similarly qualified employees on or before December 31, 2020; or
  • Is able to demonstrate an inability to return to the same level of business activity as such business was operating at prior to February 15, 2020.

But a business will still need to document in writing as thoroughly as possible all its efforts to rehire employees through December 31.

Industry consultant Todd Ramsey of Ramsey Consulting Group said the new law is more generous than he expected and good news for dealers who received the original PPP.

“Generally speaking, I think this is good because it relaxes not only the time lines from 8 weeks to the 24, but it relaxes the percentage of money that goes to payroll from 75 to 60 percent.  It gives them more bandwidth to hire back the people they want to hire back but not necessarily everybody,” Ramsey said.  Some employees may wish to stay at home longer for family reasons. Some employees weren’t a good fit.

“They now have until December 31 to meet the head count goal, which gives people plenty of time for someone to stay at home for medical leave or family related restrictions [due to COVID-19],” he added.



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  1. I have been corresponding with Todd Ramsey back and forth in regards to the EIDL loan. It has been a huge help as the program tends to change and be altered consistently. Being on top of the most recent changes and knowing best practices and limitations of use of funds is extremely important to keep you and your company compliant. Having Todd as a resource has been a huge relief to a confusing program.

    Thank You Todd!!

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