The U.S. Senate passed the House version of Paycheck Protection Program (PPP) legislation Wednesday, June 4, 2020, tripling the time allotted for small businesses and allowing for more flexibility. The Senate approval was signed by President Trump, on Friday, June 5, 2020.
- Borrowers can choose to extend the eight-week period to 24 weeks, but the covered period can’t extend beyond December 31, 2020. This flexibility will allow more borrowers to qualify for maximum “forgiveness” on their PPP funds.
- A sliding scale will no longer be applied to payroll expenditures, but rather business must spend 60% of their loan amount on payroll or none of their loan will be forgiven. Initially 75% was the goal, but a sliding scale would have been applied to forgive a partial part of the loan. Allowing businesses to spend up to 40% of PPP funds on certain non-payroll expenses (up from 25% previously).
- Borrowers will be given more time to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness by December 31, a change from the previous deadline of June 30.
- Provide more flexibility for businesses by allowing them to potentially avoid a reduction in forgiveness if they could not return to the same level of business due to “the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.”
- Terms for existing PPP loans can be extended up to five years. New borrowers will also be offered a five year repayment period. . The interest rate of 1% remains unchanged.
- Payroll tax payments can be delayed under the PPP loan, which was not an option under the CARES Act.