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Important PPP Update: Senate Passes Paycheck Protection Program Flexibility Act

The Senate unanimously passed, by voice vote, the Paycheck Protection Program Flexibility Act (H.R. 7010), which seeks to improve the PPP and allow more flexibility for small businesses using the rescue loan funds. 

The bill was approved by the House on Thursday, May 28, by a 417-1 vote and has now been signed into law by President Trump.  

The legislation makes several changes to the Paycheck Protection Program for current borrowers, including the following: 

  • Extend the time allotted to spend the funds and still qualify for loan forgiveness from eight to 24 weeks, not to extend beyond December 31, 2020 (borrowers can elect to maintain the eight week period if they wish)
  • Reduce the percentage that must be spent on payroll from 75% to 60%, allowing a greater percentage of proceeds to be used on rent, utilities, and other approved non-payroll expenses
  • Extend the deadline to re-hire workers from June 30 to December 31, allowing business owners more time to reach pre-pandemic levels required for full forgiveness
  • Extend from two to five years the time borrowers have to repay the loan if the amount provided doesn’t convert into a grant
  • Defer the 6.2% payroll tax that employers are charged for employees for a period of two years, regardless of whether the borrower receives loan forgiveness under the PPP program

The Small Business Administration reported that 4.5 million firms had received approvals for loans totaling $510.6 billion. About $130 billion remains from the second round of $320 billion that Congress approved for PPP. The initial round of $349 billion was tapped in just 13 days.