President Expected To Sign Paycheck Protection Program Modification Bill
The President is expected to sign the federal “Paycheck Protection Program (PPP) Flexibility Act of 2020” (H.R. 7010). Highlights include:
— Extends the PPP loan forgiveness period from eight weeks to 24 weeks or through the end of the year, whichever comes first.
— Reduces the 75 percent threshold needed to be spent on payroll to 60 percent which allows a greater percentage of the PPP loans to be used on rent and other approved non-payroll expenses.
— Increases the PPP loan repayment period from two year to five years.
— Allows businesses that receive loan forgiveness to defer payroll taxes.
— Extends the June 30 rehiring deadline to December 31, 2020. PPP loans will be forgiven if businesses restore staffing or salary levels that were previously reduced. The provision would apply to worker and wage reductions made from February 15 through 30 days after enactment of the CARES Act, which was signed into law on March 27.
— Provides additional flexibility on loan forgiveness for PPP recipients who show they could not rehire workers or reopen due to safety standards.
During U.S. Senate consideration, Senator Ron Johnson (R-WI) objected to the bill over concerns that the PPP application deadline could technically be extended until the end of the year.
Sen. Johnson dropped his objections after Senate Majority Leader Mitch McConnell (R-KY) agreed to add a letter to the Congressional Record clarifying that June 30 remains the deadline for applying to receive a PPP loan.