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President Donald Trump signed the Paycheck Protection Program Flexibility Act into law Friday, bringing some tweaks to the $669 billion in lending relief favored by business owners.

At the same time, it introduces new measures that could be seen by some as pitfalls.

A major change that could bring relief to borrows is the extension of the period to incur costs eligible for forgiveness from eight weeks after loan issue to 24 weeks, or through Dec. 31, whichever comes first.

This will give borrowers more time to rack up their costs, including payroll, and remain eligible for loan forgiveness.

Under the original PPP terms, borrowers had until June 30 to restore reduced staffing or salary levels. The new terms will now give some borrowers until Dec. 31, and it would apply to workers and wage reductions made from Feb. 15 through 30 days after the CARES Act was signed into law, which was March 27.

Should a company not be able to rehire their workers employed as of Feb. 15, or able to find similarly qualified workers, their forgiveness amount will still be maintained if they document the situation.

Under the modified terms, if borrowers document that they are unable to restore business levels from before Feb. 15 because of having to follow federal requirements for sanitization or social distancing, they will be covered.

A major change that is going to help many businesses is the extension of the loan maturity period, moving the two-year deadline to five years. This would only apply to PPP loans made after the measure was passed, but borrowers and lenders will be able to agree to extend existing loans.

Borrowers may also defer principal and interest payments on PPP loans until the U.S. Small Business Administration compensates lenders for any forgiven amounts, instead of the current six-month deferral period. Borrowers that don’t apply for forgiveness would given at least 10 months after the program expires to start making payments.

Along with timeline changes, there is also a major adjustment on the ratio borrowers could spend on payroll and other expenses.

Originally, for a borrower to get their loan fully forgiven, they would have to spend at least 75% on payroll costs, and allowing 25% to go to other non-payroll costs. If a borrower were to spend more than 25% on non-payroll costs, they would have that amount reduced in their forgiveness rate.

H.R. 7010 brings down the payroll requirement costs to 60% and raises the non-payroll allowance up to 40%.

This could be a trap for some borrowers.

If a borrower fails to spend at least 60% of the loan proceeds on payroll costs, then none of the loan will be forgivable, creating a cliff for borrowers. Basically, borrowers are getting a longer covered period for the 60% of the loan to be spent for payroll.

For businesses still wishing to apply for PPP loans, the deadline has been moved from June 30 to Dec. 31.

As of last week, more than 4.5 million business across the U.S. had received $510 billion in loans to keep employees on payroll. A total of $669 billion was allocated to the program.

Read the June 12 print edition of The Business Journal for more information, including local reaction.