The House of Representatives voted to pass legislation to make changes to the Paycheck Protection Program (PPP). The legislation, called the Paycheck Protection Program Flexibility Act, would provide employers additional flexibility in the PPP and make loans more accessible. The Senate would need to pass the legislation to implement the changes.
The legislation would change the PPP sunset date from June 30 to December 31 and allow forgiveness for expenses beyond the eight-week covered period to 24 weeks. The Act also would increase the current limitation on non-payroll expenses for loan forgiveness from 25% to 40% and lengthen the loan maturity date from two to five years. The legislation would ensure full access to payroll tax deferment for companies that take PPP loans, would extend the loan forgiveness rehire date to December 31, and would create a safe harbor for businesses that make a good-faith effort to hire or re-hire qualified employees. Additionally, under the proposed legislation, borrowers who received PPP loans prior to enactment of the Paycheck Protection Program Flexibility Act would be able to choose whether the covered period of their loan lasts eight weeks or 24 weeks.
The Associated General Contractors of America (AGC) applauded the decision by the House of Representatives, stating the alterations to the PPP could help save construction jobs.
“The House-passed measure corrects many of the problems with the original Paycheck Protection Program by extending the coverage period to 24 weeks, revising the eligibility formula to 60% payroll costs and 40% non-payroll, extending the maturity period for the loans from two years to five, and allowing loan recipients to defer payroll taxes through the end of 2020,” AGC CEO Stephen Sandherr said in a prepared statement. “Combined, these improvements will save construction jobs and provide greater relief for many construction firms struggling to survive the COVID-19 pandemic and related economic lockdowns.
Under the PPP, small businesses--companies with 500 employees or fewer--can apply for partially forgivable loans that can cover operating expenses. Originally allocated $349 billion as part of the CARES Act, funding for the PPP ran out within two weeks. The government was quick to approve a bill including an additional $310 billion for the PPP.
