Are you in a panic about spending your PPP before your 8 week deadline runs out in order to maximize the amount that will be forgiven? Relax, pour yourself a cold drink, and pull out your calendar. Because on June 5, the President signed the Paycheck Protection Program Flexibility Act of 2020. This Act does four major things:

1. It extends the PPP forgiveness period from eight weeks to 24 weeks, meaning that you now have 24 weeks to spend the funds to qualify for full forgiveness. For instance, if your loan was funded on May 1, you now have until October 15 to spend the money. (If it works out better for you, you can elect to stick to the 8 week period. You might want to do that if you have already spent the money and restored your headcount and salary levels.)

2. The Act changes the “Covered Period” from June 30 to December 31. This means that employers now have until December 31 to restore their headcount and salary levels to be equivalent to what they were during whichever of the two reference periods is selected by the employer.

3. The Act changes the minimum percentage of funds that must be used on payroll from 75% to 60%. The remaining amount can be spent on payroll, or mortgage interest, rent, or utilities.

4. Finally, the Act adds some additional safe harbor exemptions to the requirement that you restore headcount. In a nutshell, if you can prove that you are unable to re-hire an employee who was on the payroll as of February 15 (because they refuse to come back to work even though you have complied with all the required safety precautions) and you are unable to find a replacement employee before December 31, then you will not be penalized for reducing your headcount when it is time to do the FTE calculation. You will also not be penalized if your business is unable to resume normal business levels because you are complying with guidelines. For example, if a restaurant can only operate at 30% capacity because of social distancing guidelines, then that restaurant will obviously not need all its employees to return to work.

If you did not get a PPP yet, funds are still available! As of this writing, about $120B is still unclaimed. Note that the deadline to apply is still June 30, so if you think your business could benefit from this loan, go for it!

This latest round of guidelines is proof of what we have been saying all along: the rules are subject to change. As a worst case scenario, be prepared to pay the money back.