Paycheck Protection Program Flexibility ActBy Anne Zavaglia
Posted on May 29th, 2020
The Paycheck Protection Program Flexibility Act passed the House on May 28, 2020. If enacted, the House bill will make a number of changes to the Paycheck Protection Program (PPP). Businesses that received a PPP Loan would have more time to use the funds, and a smaller percentage of the funds would need to be used for payroll, making it easier for businesses to qualify for loan forgiveness.
The bill had bipartisan support, passing the House by an overwhelming 417 to 1 vote. The bill extends the “covered period” in which businesses must use PPP loan funds from 8 weeks to 24 weeks. The bill would amend the rule requiring 75% of funds be spent on payroll costs to 60% in order to qualify for loan forgiveness. Additionally, the deadline to rehire workers would be pushed back from June 30 to December 31, 2020.
Currently under the CARES Act, businesses have until June 30 to apply for a PPP loan. The bill would extend the application deadline to December 31, 2020. If enacted, new PPP loans would have a 5 year term. Businesses with an existing PPP loan would still have a two year term, but can work with their lender to modify the term.
6/4/2020 Update: The bill has passed in the Senate and awaits President Trump’s signature.