News

6/3/2020

Paycheck Protection Flexibility Act, H.R. 7010

The U.S. House of Representatives passed the Paycheck Protection Flexibility Act, H.R. 7010 on May 28, 2020. The Senate passed the bill June 3, 2020. The bill is now headed to the president’s desk.  The purpose of this bill is to ease the forgiveness requirements for the Paycheck Protection Program loans.   If passed, loan recipients will have looser restrictions as to how and when the funds need to be spent.  The potential changes to the forgiveness requirements are as follows:

• Reduces the 75% payroll cost requirement to 60% and allows up to 40% of the loan to be used for qualified non-payroll costs
• Extends the forgiveness period from 8 weeks to the earlier of 24 weeks or December 31, 2020
• Business would have until December 31, 2020 to restore wages and rehire workers instead of the original deadline of June 30, 2020
• Provides leniency to businesses who are unable to restore the number of full time equivalent employees before December 31, 2020 due to one of the following:
  • An inability to rehire individuals who were employees of the eligible recipient on February 15, 2020; and an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020
  • An inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration during the period beginning on March 1, 2020, and ending December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.
• Extends the Maturity of the Loan from 2 years to 5 years
• Extends the deferral period for loan payments to the date that the amount of forgiveness is determined or 10 months after the last day of the covered period
• Allows borrowers who applied for PPP forgiveness to take advantage of Section 2302 of the CARES Act, which allows companies to delay the payment of payroll taxes

This bill still needs to be signed into law by the President before the changes listed above are enacted and the specifics of the bill will likely change during this process.