May 29, 2020
The U.S. House of Representatives on Thursday overwhelmingly passed the “Paycheck Protection Flexibility Act” (HR 6886) to give small businesses more time and flexibility to use their Paycheck Protection Program (PPP) loans.
This bill would:
- Give small businesses more time to use their loans and still qualify for loan forgiveness—extending it from 8 weeks to 24 weeks
- Reduce the amount of the loan that must be used for payroll in order to qualify for loan forgiveness to 60% from 75%
- Extend the repayment timeline for any non-forgiven loan balance from 2 years to 5 years
- Allow businesses that receive forgiveness to also receive payroll tax deferment
- Ensure small businesses won’t be penalized by high unemployment benefits
- Create a safe harbor for businesses that are required to open at only 50% capacity
These changes were also included in the House-passed HEROES Act, which is stymied in partisan negotiations in the U.S. Senate. One important difference to note, however, is the Paycheck Protection Flexibility Act does not expand eligibility for the PPP to include 501(c) nonprofits as the HEROES Act does.
The Senate is also working on similar legislation to provide quick fixes to the PPP. Any legislation passed by the Senate would then need to be reconciled with the House version before heading to the President for his signature.
For more information on the PPP, see CMA’s COVID-19 Financial Toolkit for Medical Practices.