The U.S. Senate passed the “Paycheck Protection Program Flexibility (PPP) Act of 2020” on Thursday, which extends the PPP and amends the terms of the program for loan recipients.
According to the Auto Care Association, the bill, which passed in the House on May 28, will now head to President Trump for his signature. It changes the terms of the PPP in favor of loan recipients by:
- Establishing a minimum maturity of five years for a loan with a remaining balance after forgiveness.
- Extending the covered period during which loan funds may be used for certain expenses. The original covered period was eight weeks from the date of loan origination and ended on June 30. It is now extended to 24 weeks after the loan origination or Dec. 31, 2020.
- Superseding the Small Business Administration’s policy that 75% of loan proceeds must be used for payroll expenses. The new percentage is 60%.
- Extending the period of time in which a business may re-hire furloughed employees and restore wages in order to maximize loan forgiveness. And, accommodations are made for businesses that are either unable to rehire former employees and are unable to hire similarly qualified employees, or are unable to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19.
- Allowing recipients to defer loan payments until they receive compensation for forgiven amounts.
- The Small Business Administration will issue implementing regulations and amend the application for PPP loan forgiveness in accordance with the Act, the association says.
To get your questions answered on the PPP program, use this FAQ from the Small Business Administration.