On June 3, the Senate passed bipartisan legislation that would make significant changes to loans made to employers under the Paycheck Protection Program. The Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010) already was approved overwhelmingly by the House.
Once signed by the president and enacted into law, which is anticipated, the bill would update the PPP loan program to do the following:
- Extend the current eight-week covered period to 24 weeks that businesses have to use the funds and restore laid-off employees to qualify for loan forgiveness
- Extend the PPP program deadline through Dec. 31 (currently under the CARES Act, the program runs through June 30)
- Change the 75% payroll costs/25% non-payroll costs rule regarding how loan proceeds must be used to qualify for forgiveness to 60%/40%
- Extend the term of the loan repayment on funds not forgiven from two years to five years
- Ensure full access to payroll tax deferment for businesses taking PPP loans (currently under the CARES Act, an employer can’t defer payroll taxes if receiving any forgiveness on a PPP loan)
Once the legislation is enacted into law, the Small Business Administration and Treasury Department will need to revise the PPP Loan Forgiveness Application to reflect these new rules. Employers who have PPP loans outstanding and are planning to apply for forgiveness should contact their lender for more information.
As of this week, there is about $120 billion still available in the PPP loan program. If you are interested in applying for a PPP loan, view more information, including the application.
