President Trump Expected to Sign Paycheck Protection Program Flexibility Act
Bill Passed by U.S. Senate Last Night Reduces Minimum Amount of PPP Loan That Must Be Spent on Payroll, Extends Time Loan Can Cover, Among Other “Fixes”
At around 7pm last night, the U.S. Senate passed the Paycheck Protection Program Flexibility Act of 2020, PPP “fix” legislation earlier passed by the House. There were concerns the bill would be blocked in the Senate, but a last-second deal was reached to pass the bill by a voice vote, and the bill now goes to President Trump for his signature.
In short, the bill would:
- Lower to 60% from 75% the minimum portion of the PPP
loan that must be spent on payroll. The rest must be spent on allowable non-payroll expenses (rent, utilities etc.). However, the legislation as written would require companies to spend 60 percent on payroll or none of the loan would be forgiven. Subsequent legislation is expected to clarify this.
- Extend from eight to 24 weeks the amount of time the loan can cover
- Extend the loan duration from two to five years (for the amount
not converted into a grant, if any, but only for new loans)
- Extend the program through December 31, 2020
- Push back a June 30, 2020, deadline to rehire workers to December 31, 2020
- Provide more flexibility on loan forgiveness for businesses who document
that they could not rehire workers or reopen due to safety standards
- Allow companies that get loan forgiveness to defer payroll taxes
The MAC is reviewing the legislation and will update our PPP Loan Forgiveness FAQ document as soon as possible after President Trump signs it into law.
This is not the end of legislative “fixes” to the
Program, however, as Senate Majority Leader Mitch McConnell said that Senate Committee on Small Business and Entrepreneurship Chairman Sen. Marco Rubio of Florida will continue working on “technical fixes” to the Program. Stay tuned.
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