Senate Passes Paycheck Protection Flexibility Act
On Wednesday night, the Senate voted unanimously in favor of the Paycheck Protection Flexibility Act. This new legislation makes key adjustments to the timeline for spending Paycheck Protection Program (PPP) funds and revises how loan recipients are required to allocate the money.
Here is a brief overview of the key provisions contained in the bill:
- Loan recipients now have 24 weeks to spend the funds, or they may elect to keep the original eight week period.
- The percentage of the loan money required to be devoted to payroll expenditures has been reduced from 75% to 60%. This item does come with a new catch – if a borrower fails to spend at least 60% of the loan money on payroll, then none of the loan will be forgiven.
- The minimum term period for PPP loans is extended from two years to five years.
- The deadline for rehiring employees and restoring wages to pre-pandemic levels is extended from June 30, 2020 to December 31, 2020.
- Loan recipients have more leeway on loan forgiveness if they can provide evidence that they were unable to find qualified employees, that it was not possible to restore business operations to February 15, 2020 levels, or if the employee refuses to return to work.
- The bill allows businesses that took a PPP loan to also delay payment of the employer’s share of FICA payroll taxes.
The bill now heads to the President, who is expected to sign it.