This week the SBA released guidance allowing borrowers increased flexibility in choosing a time frame between 8 and 24 weeks to spend loan proceeds on eligible expenses for forgiveness. In the original CARES Act, the allowed “covered period” was 8 weeks. The PPP Flexibility Act followed up with a second option of choosing a 24 week covered period. The new guidance provides the most flexibility allowing borrowers to choose a “customized” covered period somewhere between 8 and 24 weeks and apply for forgiveness once the loan proceeds have been depleted. This will be a unique decision for each business and will require evaluating several related factors including the impact of the PPP loan on year-end financial statements, bank covenants, bonding capacity, etc. It also will allow business owners to defer expenses for a longer period of time, thus preserving cash flow and still qualifying for forgiveness.

The guidance makes it clear that businesses can submit the application for forgiveness at any time before the maturity date of the loan. This means that a borrower can submit a forgiveness application even if the loan has reached the required monthly payment stage, up and until the final payment of the loan is due.

While the new rule provides greater flexibility, it also means there are more decisions to be made. With so many open questions, it is clear that this is not a “one-size fits all” process. It is important to evaluate all planning opportunities surrounding the PPP proceeds in order to maximize the benefits. There are many questions to address such as: which expenses qualify for forgiveness, what covered period is most advantageous, when should a business submit its application for forgiveness, what are the income tax planning opportunities, what are the debt restrictions, etc.?   The answers to these questions depend on the individual facts and circumstances of each unique business.

Please reach out to your Somerset advisor or to one of our SBA team members to assist you in applying the new requirements to your individual business’s situation. Contact us at with any questions.