Wednesday, August 5, 2020
Home Government Update: PPP Flexibility Act Extends Protections for Small Businesses

Update: PPP Flexibility Act Extends Protections for Small Businesses

President Donald Trump on Friday signed new legislation unanimously passed by the House and Senate that extends key provisions to the Payroll Protection Program to increase the likelihood that the small business loans will be fully forgiven amid the COVID-19 health crisis, even as states across the nation are reopening their economies in phases.

In a Zoom meeting on Thursday, United Motorcoach Association Vice President of Legislative and Regulatory Affairs Ken Presley commented that about $120 billion remains available in the program.

The bill passed by the Senate on Wednesday increases the amount companies can spend on non-payroll expenses up to 40 percent of the loan. That means companies must spend at least 60 percent of funds on payroll, rather than the original 75 percent.

It also allows companies with new loans to spend funds over a 24-week period rather than 8 weeks, as stipulated in the original legislation. Existing borrowers can choose to take advantage of the new provision.

The PPP Flexibility Act extends the time to repay loans from two years to five years. Existing loans can also be renegotiated with the lender to take advantage of the longer repayment window.

A Safe Harbor provision allows companies to obtain full loan forgiveness even if they can’t fully restore all employees who were laid off or furloughed. This would protect companies with employees who say they won’t or can’t return to work, as long as the companies in “good faith” documented their attempts but failed to fill the empty positions.

In an effort to increase company cash flow, the final bill also allows companies to defer paying their Employer Payroll Taxes incurred in 2020 until the end of 2021, rather than the end of this year.

Once signed into law, the Small Business Administration must finalize the guidelines.

It took a mere couple of weeks for the legislation to obtain final approval, since it was introduced by Rep. Dean Phillips of Minnesota and Rep. Chip Roy of Texas on May 26. H.R. 7010 received bipartisan support in Congress and from dozens of organizations, including the Small Business Roundtable, the National Small Business Association, the U.S. Chamber of Commerce, the U.S. Black Chambers, Inc., the U.S. Hispanic Chamber of Commerce, and the National Association of Women Business Owners.


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