Congress Passes Bill Providing PPP Loan Flexibility
June 4, 2020
Late yesterday, the U.S. Senate unanimously passed the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010), which provides new flexibilities for businesses, including hospitals, that accessed loans through the Paycheck Protection Program (PPP), established in the CARES Act. Among other flexibilities, the legislation makes the following adjustments:
- Allows 24 weeks (instead of 8 weeks) for borrowers to use funds and qualify for loan forgiveness;
- Reduces the amount (from 75% to 60%) of the loan that must be spent on payroll in order to be eligible for forgiveness;
- Extends the deadline for the rehire employees from June 30 to December 30;
- Allows businesses that receive forgiveness to also defer the 6.2% employer portion of social security payroll taxes, as allowed under the CARES Act; and
- Eliminates the six-month deferral of payments and replaces it with deferral until the date on which the amount of forgiveness is remitted to the lender.
The legislation passed the U.S. House on May 28, and is now headed to the President for his signature.