Potentially Urgent: Senate Considering House Bill to Change PPP Loan Rules

/ Freidel & Associates, LLC/

On May 28, the House of Representatives overwhelmingly (417-1) passed the Paycheck Protection Program Flexibility Act of 2020, which would fundamentally alter some of the rules relating to the Paycheck Protection Program (“PPP”). The bill has moved to the Senate, where Bloomberg is reporting that Senate Majority Leader McConnell said Monday, June 1, that:

I hope and anticipate the Senate will soon take up and pass legislation that just passed the House by an overhelming vote of 417-1 to further strengthen the Paycheck Protection Program so it continues working for small businesses that need our help.

Obviously, until the bill has passed the Senate and has been signed into law by President Trump, businesses need to operate under the current guidance and rules. But, if passed, the bill would mean drastic changes to the rules under which businesses have operated.

Importantly, the bill would:

  1. Extend the covered period under which the loans can originate to December 31, 2020, from June 30, 2020.

  2. Extend the covered period in which businesses must use the funds to be eligible for forgiveness to 24 weeks from 8 weeks.

  3. Extend the time-frame for businesses to rehire employees to December 31, 2020, without the FTE reduction in loan forgiveness, from June 30, 2020.

  4. Reduce the amount of payroll costs required for maximum forgiveness from 75% to 60%.

  5. Set the maximum time to apply for forgiveness to 10 months after the businesses’ 24 week covered period (or 10 months after December 31, 2020, whichever is earlier).

Stay tuned to see if the bill passes and alters the PPP in ways that could benefit your small business.