The U.S. Senate yesterday unanimously passed the House of Representative’s Paycheck Protection Program Flexibility Act (H.R. 7010), which now goes to President Trump for his expected signature. The Act’s significant amendments to the Paycheck Protection Program (“PPP”) loan program include the following:
- Borrowers have until December 31, 2020 to spend PPP funds.
- Borrowers can have a 24 week “covered period” from origination of the loan to use the funds on a forgivable basis (a change from the previous 8 week requirement).
- The payroll expenditure requirement drops to 60% from 75%, but is now a cliff. This is likely to be fixed and a sliding scale of forgiveness restored.
- Borrowers can restore their workforce levels and wages to the February 15, 2020 pre- pandemic levels required for full forgiveness by December 31, 2020 (a change from the previous deadline of June 30, 2020).
- The legislation includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. The Act provides that the forgivable amount must be determined without regard to a reduction in the number of employees if the recipient is (1) unable to rehire former employees and is unable to hire similarly qualified employees, or (2) unable to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19.
- Borrowers now have five years to repay the loan instead of two.
- Borrowers have up to 10 months from the date their covered period ends to apply for loan forgiveness.
- The Act allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act.
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