This blog was originally published on June 4, 2020. On June 5, President Trump signed H.R. 7010 into law. The following provisions are now in effect.
The Senate and the House of Representatives have reached an agreement on the Paycheck Protection Program (PPP) Flexibility Act of 2020. Once signed into law, this will provide several provisions designed to grant more leeway to PPP loan recipients, including relaxing restrictions on loan forgiveness.
Administered through the Small Business Administration, the PPP helps ensure businesses have sufficient funding to meet payroll for their employees — a significant area of focus for coronavirus relief legislation.
The new legislation would:
- extend the time frame for employers to spend PPP funds and qualify for loan forgiveness from eight weeks to 24 weeks
- extend the maturity date of portions of PPP loans that do not receive forgiveness from two years to five years
- increase the allowable amount of forgiveness-eligible loan proceeds to be spent on nonpayroll costs (e.g., mortgage interest, rent, utilities) from 25% to 40%
- extend the deadline to apply for a PPP loan from June 30 to Dec. 31, 2020
- extend the repayment deferral period from six months to one year
- allow employers until Dec. 31, 2020 (previously June 30, 2020), to restore reduced employee wages or head count to avoid a reduction in loan forgiveness
- enable employers who receive PPP loan forgiveness to defer Social Security taxes
For more information, read the full text of the act at congress.gov.
Learn more about news and legislation that may affect your business on the Paycom blog.