In addition to new regulations governing loan forgiveness, another major development with the PPP program was the passage of legislation that would significantly modify key provisions within the program. The U.S. House of Representatives, by a vote of 417-1, passed the “Paycheck Protection Program Flexibility Act.” This legislation aimed to address numerous concerns raised by small business owners since the passage of the CARES Act.
The PPPFA reduces the amount of the loan needed to be spent on payroll from 75 percent to 60 percent. This means you will be able to spend more of the PPP loan on rent, mortgage payments, utilities, and other expenses.
Other modifications contained within the House bill includes:
- Lengthening the amount of time business owners have to use the PPP loan funds from eight weeks to 24 weeks.
- Extending the deadline to rehire workers to from June 30, 2020 to December 31, 2020.
- Lengthening the amount of time recipients have to repay the loan
- Enable business owners to defer payroll taxes for loan forgiveness
Competing Legislation Working Its Way Through the Senate
The House bill will now be sent to the U.S. Senate for consideration. Minority Leader Sen. Chuck Schumer (D-NY) endorsed the House bill. However, Sen. Marco Rubio (R-FL), Chairman of the Senate Small Business and Entrepreneurship Committee, has thrown his support behind a different bill.