House Passes Bill to Extend, Expand Provisions of PPP
On May 28, 2020, in a nearly unanimous vote, the U.S. House of Representatives voted to extend certain provisions of the Paycheck Protection Program (PPP) to provide small businesses with relief in the timeframe and use of their PPP loan funds. Support for enhancing the PPP terms to support business and economic recovery seems to be gathering bi-partisan support from both houses of Congress and the White House. The House passed its version of PPP extensions to move the discussion forward in the Senate this week.
As recipients of PPP loans are approaching the end of their 8–week period of measurement from receiving funds, more questions and business-friendly recommendations regarding the timeframe and parameters for usage of loan funds have taken center stage. House representatives took these issues into consideration in their Flexibility Act.
The most notable changes in the Paycheck Protection Program Flexibility Act were:
- Extension of the period to use funds from 8 weeks to the earlier of 24 weeks or December 31, 2020
- A decrease in the required use of funds for payroll from 75% to 60%
- Deferment of payroll taxes for those who receive loan forgiveness
- Extension of June 30 rehiring deadline to December 31, 2020
- Increased leeway on loan forgiveness for demonstrating rehiring challenges or reopening challenges including:
- Inability to rehire an individual who was an employee as of February 15, 2020
- Inability to hire similarly qualified employees on or before December 31, 2020
- Inability to return to the same level of business activity prior to February 15, 2020
- Increased of minimum loan maturity to 5 years
The Senate will take up the bill this week and consider their proposals from Senators working on similar legislation. We will continue to update this story as developments occur with changes and reconciliation of the House and Senate proposals for expanding the PPP terms. Join us on Tuesday, June 2 for our discussion regarding current PPP Loan Forgiveness rules from the SBA and the most current news regarding proposed changes.