Tarlow Update: The Paycheck Protection Program (PPP) Flexibility Act Passed the House

The Paycheck Protection Program (PPP) Flexibility Act passed the House on Thursday, May 28, 2020. The PPP Flexibility Act extends the time businesses need to spend funds and alters the rule that they must contribute 75% of the funds on payroll for full forgiveness (that level would be reduced to 60%).

The House bill proposes extending the time in which businesses must use the funds from eight weeks to 24 weeks; amending the 75/25 rule for how much businesses must spend on payroll versus non-payroll costs to get full forgiveness of the loan to 60/40. The bill pushes back the deadline to rehire workers from June 30 to December 31; and extends the two-year term for the loans to five years, among other provisions.

The Senate has its own PPP extension bill that would propose increasing that time frame from eight to 16 weeks, extend the deadline to apply for the PPP, and allow businesses to use funds to purchase protective equipment for employees, among several other amendments.

The first recipients of loans that opened up on April 3 are nearing the end of their eight-week period. Many small businesses and lobbyists have argued the time frame and payroll limits have made it challenging for businesses that remain unable to fully open, (especially restaurants, bars, and salons), to use the funds.

The House’s legislation has been widely endorsed by various outside groups, including the U.S. Chamber of Commerce and the National Restaurant Association, among others. 

The House bill now heads to the Senate for a vote. The bill must be signed by the President to become law.

 

Tarlow is here to help!

Our Partners and staff members are closely monitoring tax-related legislation and regulations and will continue to update you by sending communications about relevant news and changing guidelines. If you have any questions, please contact your Tarlow advisor.