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Paycheck Protection Program Flexibility Act of 2020

The Flexibility Act will greatly benefit small business owners who borrowed PPP funds, increasing their ability to have those loans forgiven.

Articles by Betterment Editors
By the Editorial Staff Betterment Resource Center Published Jun. 09, 2020
Published Jun. 09, 2020
2 min read

On June 5, 2020, President Trump signed into law the Paycheck Protection Program Flexibility Act of 2020 (the “Flexibility Act”), which modifies provisions related to the forgiveness of loans made to small businesses under the COVID-19 related Paycheck Protection Program (PPP). The Flexibility Act will greatly benefit business owners who borrowed PPP funds and increase their ability to have those loans forgiven.

What is being modified?

  • The time period during which PPP loan proceeds must be spent has been modified from 8 weeks from loan origination to the earlier of 24 weeks from loan origination OR December 31, 2020.
  • The percentage of loan proceeds that may be spent on Eligible Non-Payroll costs has increased from 25% to 40%.
  • The deadline to restore full-time employee headcount and/or wages that were cut or decreased between February 15, 2020 and April 2, 2020, has been extended to December 31, 2020.
  • The loan maturity term date for new loans taken after June 5, 2020, has been extended from 2 years to 5 years. Borrowers and lenders can renegotiate maturity dates of existing PPP loans.
  • The deadline for repaying any portion of loans that are not forgivable has been extended from 6 months to the time when the lender receives the forgiven amounts from the SBA. However, if a borrower fails to apply for forgiveness within 10 months after the end of the covered period, then the borrower must immediately begin making repayments.

Betterment is not a tax advisor, nor should any information in this article be considered tax advice. Please consult a tax professional.

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