Sandusky, Ohio Office
422 West Market Street
Sandusky, OH 44870
FAX: 419-625-7120


Norwalk, Ohio Office
257 Benedict Avenue, Building D
Norwalk, OH 44857
FAX: 419-663-3637



Monday–Friday: 8 am – 5 pm
Fridays from May 1 through
Labor Day we close at noon.

Fridays from September 11 through October 31 we close at 3 pm



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CPAs Net

SBA issues update first PPP interim final rule following PPP Flexibility Act  

June 11, 2020
Payne, Nickles & Company



On June 10, 2020, the Small Business Administration (SBA) issued an updated interim final rule for the Paycheck Protection Program (PPP) in response to the PPP Flexibility Act passed on June 5, 2020. The updated guidance accounts for revisions made to the covered period, usage of funds changes, extended safe harbors, and more.


Here is a quick rundown of the changes made by the PPP Flexibility Act.


Criteria Prior Guidance Current Guidance
Covered Period* 8 weeks from PPP loan disbursement The earlier of 24 weeks from date of loan disbursement or Dec. 31, 2020.
Usage of Funds Minimum of 75% of funds must be used for payroll with a maximum of 25% for non-payroll costs to achieve forgiveness
Minimum of 60% of funds must be used for payroll with with a maximum of 40% used for non-payroll costs to achieve forgiveness. 
Extension of Safe Harbor for Compensation & FTE Reductions Salary or hourly wage reductions must be reinstated by June 30, 2020, to avoid reduced foregiveness Salary or hourly wage reductions have until Dec. 31, 2020, to be restored to avoid reduced foregiveness
Deferral of Loan Payments 6 months from loan origination date Earlier of 10 months after the last day of Covered Period or when SBA remits the loan forgiveness funds to lender
Loan Maturity 2 years Loans originated after June 5, 2020 - 5 years 
Loans originated prior to June 5, 2020 - Borrowers and lenders may mutually agree to extend the maturity date of loans to 5 years
Safe Harbors Based on Employee Availability, Rehiring, New Hires None Forgiveness would not be reduced if borrowers can document in good faith:
- Inability to rehire individuals employed on Feb. 15, 2020
- Inability to hire similarly qualified employees by Dec. 31., 2020 
Safe Harbors Based on Employee Availability in Compliance with HHS, CDC, or OSHA guidelines None Forgiveness would not be reduced if borrowers can document in good faith the inability to return to same level of business activity as before Feb. 15, 2020, due to compliance with requirements issued by HHS, CDC, or OSHA from the period of March 1, 2020 to Dec. 31, 2020



Also of note:
  • *Borrowers may elect to stick with the 8-week covered period for loans originating prior to June 5, 2020. However, it is not clear if the June 30, 2020, safe harbor deadline still applies.
  • The amount of any Economic Injury Disaster Loan (EIDL) refinanced will be factored in when determining the percentage of proceeds for payroll costs.
  • It is unclear whether compensation limits formerly prorated based on 8 weeks now prorated based on 24 weeks. 
  • It is unclear if the covered period may end prior to 24 weeks if funds have been used.



Further guidance and instructions are anticipated especially as they relate to the PPP Loan Forgiveness Application. Stay tuned for updates and contact us for assistance with your loan forgiveness application. 

419-625-4942             419-668-2552
Sandusky                             Norwalk




Treasury Circular 230 Disclosure

Unless expressly stated otherwise, any federal tax advice contained in this communication is not intended or written to be used, and cannot be used or relied upon, for the purpose of avoiding penalties under the Internal Revenue Code, or for promoting, marketing, or recommending any transaction or matter addressed herein.