Senate Passes Paycheck Protection Flexibility Act
The U.S. Senate has passed the Paycheck Protection Program (PPP) Flexibility Act of 2020, which amends PPP terms in favor of loan recipients. Now headed to President Donald Trump, the bill established a minimum maturity of five years for a loan “with a remaining balance after forgiveness,” according to Auto Care Association officials.
It extends the covered period during which loan funds may be used for certain expenses. (The original covered period was eight weeks from the date of loan origination and ended on June 30. It is now extended to 24 weeks after the loan origination or Dec. 31, 2020.)
It also extends the period of time in which a business may re-hire furloughed workers and restore wages to maximize loan forgiveness. Accommodations have been made for businesses that are unable to re-hire former employees and are unable to hire similarly qualified employees or are unable “to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19.”
In addition, the bill lets recipients defer loan repayments until they receive compensation for forgiven amounts. And it supercedes the Superseding the Small Business Administration’s (SBA) policy that 75% of loan proceeds must be used for payroll expenses. The new percentage is 60%.
“The Small Business Administration will issue implementing regulations and amend the application for PPP loan forgiveness in accordance with the Act.”