Covid PPP Loan Forgiveness Extentions

With President Trump signing of the Paycheck Protection Flexibility Act on Friday PPP loan borrowers now may use the money over a 24-week period, rather than the 8-week period set in the first legislation. And the PPP Loan borrowers business owners now must use 60% of the money on payroll, down from 75%. For those businesses that have not applied for the PPP Loan the deadline to apply remains June 30, at least for now.

Unfortunately there is still no clarification on what portion of S-Corporation owner-employee compensation can be applied to PPP Loan eligible expenses. The rather vague current description states “the amount of the PPP loan for any one person cannot exceed annualized pay or business profits of $100,000”. Originally “annual pay” the numbers shook out at $15,391 ($100,000 divided 12 month year X 2 month PPP period X .9235 PPP Multiple).

Summary of new Bill

  • Current PPP borrowers can choose to extend the eight-week period to 24 weeks, or they can keep the original eight-week period. New PPP borrowers will have a 24-week covered period, but the covered period can’t extend beyond Dec. 31, 2020. This flexibility is designed to make it easier for more borrowers to reach full, or almost full, forgiveness.


  • The payroll expenditure requirement drops to 60% from 75% but is now a cliff, meaning that borrowers must spend at least 60% on payroll or none of the loan will be forgiven. Currently, a borrower is required to reduce the amount eligible for forgiveness if less than 75% of eligible funds are used for payroll costs, but forgiveness isn’t eliminated if the 75% threshold isn’t met.

Recap of Eligible Expenses Include :

  • Payroll—Salaries and Wages; Including Health Benefits as well as Parental, Family, Medical and Sick Leave.
  • Employer contributions to employee retirement
  • Rent – As long as the lease agreement was signed before Feb. 15, 2020.
  • Mortgage Interest – As long as the Mortgage was signed before Feb 15, 2020.
  • Utilities – Electricity, Gas, Water, Internet, etc. As long as the service contract was signed before Feb 15, 2020.
  • Interest on certain loans