U.S. House Approves Modifications To The Paycheck Protection Program
Thursday, by a near unanimous vote, the U.S. House approved the “Paycheck Protection Program (PPP) Flexibility Act of 2020” (H.R. 7010), which provides businesses with more flexibility to spend PPP loans on payroll and other business expenses.
Specifically, businesses seeking full loan forgiveness would have 24 weeks instead of eight to spend the money and would only be required to spend 60 percent of the funds on payroll instead of 75 percent leaving a greater percentage of the PPP loans to be used on rent and other approved non-payroll expenses.
PPP recipients would also have up to five years, instead of two years, to repay any money owed on a PPP loan.
The bill represents a compromise to provide some additional flexibility in using PPP funds for non-payroll costs (rent, mortgage interest, and utilities), while at the same time still incentivizing employers to retain or rehire workers.
Earlier last week, labor unions voiced concerns over the original legislation which would have eliminated a requirement that PPP loan recipients spend at least 75 percent of their loan proceeds on payroll expenses.
The House ultimately agreed to a 60 percent threshold to be used for payroll instead of eliminating it.
The House bill now heads to the Senate where it could be amended to accommodate small business concerns that the 60 percent threshold required to be used on payroll should be reduced and/or eliminated. A vote is expected next week.
Meanwhile, the House also approved the “Small Business Transparency and Reporting for the Underbanked and Taxpayers at Home Act (TRUTH Act),” (H.R. 6782) which would require the Small Business Administration (SBA) to issue a report on PPP loan recipients of loans over $2 million.