On June 3, 2020, the Senate passed the Paycheck Protection Program Flexibility Act (H.R. 7010) via unanimous consent. The package will relax some of the existing requirements from the Paycheck Protections Program (PPP) to help businesses adapt to adverse conditions and still be eligible for loan forgiveness. The bill previously passed the House with an overwhelmingly bipartisan vote of 417-1, and will now go to President Trump for his signature.
Responding to criticisms regarding the rigidity of loan forgiveness rules, the new package will modify a number of PPP provisions that were initially enacted in the third stimulus package, the $2.2 trillion CARES Act. While program participants were allowed eight weeks to use funds, this flexibility package would expand that to 24 weeks. Additionally, the provision that 75% of loan funds must be spent on payroll has been lowered to 60% with this new legislation. Among other modifications, the bill would also establish that:
- PPP loans have a minimum maturity of five years
- Participants now also have access to payroll tax deferment
- The rehiring deadline is now extended until December 31
- Borrowers may defer payments up to 10 months after loan origination date
Despite objections over unanimous consent passage from Senator Ron Johnson, the upper chamber was able to expedite the bill’s passage on Wednesday. After clearing the Senate, the bill is expected to be signed by President Trump and become law. Once this bill is signed into law, check back at the ABA Support & Relief Hub for updates to guidance and program rules.