The new PPP Flexibility Act loosens restrictions on how small business owners use their funding.
The U.S. Senate unanimously voted to approve the Paycheck Protection Program (PPP) Flexibility Act of 2020 late Wednesday, June 3. The Act offers small business owners greater flexibility in the use of PPP funds.
President Trump is expected to sign the bill, which passed the U.S. House on May 28 with overwhelming support (417-1).
The legislation grants businesses more flexibility by:
- Extending the coverage period of the loans from June 30, 2020, to December 31, 2020.
- Extending the loan forgiveness period from 8 weeks after disbursement to 24 weeks after disbursement or December 31, 2020.
- Reducing the amount required to be spent on payroll from 75% to 60%.
- Expanding the time period for forgiveness and rehiring employees from June 30, 2020, to December 31, 2020.
- Providing leeway on loan forgiveness to small businesses that are able to demonstrate that they were unable to rehire workers due to safety concerns.
- Permitting forgiveness recipients to defer payroll taxes.
To date, the Paycheck Protection Program has issued $510 billion in loans through banks and other lenders; $120 million remains in the fund. Given a relaxation of the rules, the rest of the money is expected to be deployed soon.