Last week, Congress passed and the President signed into law H.R. 7010, the Paycheck Protection Program Flexibility Act, sponsored by Rep. Dean Phillips (D-Minnesota) and Chip Roy (R-Texas).
The bipartisan Paycheck Protection Program Flexibility Act was strongly supported by the Big “I” and creates additional Paycheck Protection Program (PPP) flexibility for Big “I” members and their clients. Specifically, the legislation will extend the expense forgiveness period from eight weeks to 24 weeks, reduce the 75% payroll ratio requirement to 60%, eliminate the 2-year loan repayment restrictions for future borrowers, allow payroll tax deferment for PPP recipients and extend the June 30 rehiring deadline.
Earlier this week, the Department of the Treasury and the Small Business Administration (SBA) issued a statement thanking President Trump and Congress for their work on this important legislation while also noting that they will be issuing further rules and guidance on their interpretation of H.R. 7010.
Importantly, the statement also made clear that the new provision reducing the 75% payroll ratio to 60%, will not be a “cliff.” That means that if a borrower spends less than 60% of the PPP loan amount for expenses that otherwise would be forgivable "payroll costs," then that borrower will benefit from partial forgiveness for their “payroll costs,” instead of no forgiveness. Before the joint statement, there had been questions about how the Treasury and the SBA would interpret that provision.
In addition, the joint statement noted that new rules confirm that June 30, 2020 remains the last date on which a PPP loan application can be approved.
As the Trump administration continues to put out guidance on the PPP and other COVID-19-related relief efforts, the Big “I” will make the most up-to-date government affairs information available on the coronavirus resource page and in the weekly News & Views e-newsletter.
Wyatt Stewart is Big “I” senior director of federal government affairs.