Leaders in the House of Representatives have agreed to hold a vote next week on the Paycheck Protection Flexibility Act (H.R. 6886), which will make urgently needed changes to the Paycheck Protection Program (PPP). The legislation, introduced by Representative Dean Phillips (D-Minnesota) and Representative Chip Roy (R-Texas), comes amid growing concern in both parties that the PPP program is impractical for many employers, especially those in tourism driven economies. Currently, the government will forgive PPP loans after eight weeks if businesses use the funds to maintain their workforce. The amended legislation would give businesses 24 weeks to spend the money as well as eliminate a requirement that forced businesses to spend at least 75 percent of the funds on payroll if they want the full amount of the loans to be forgiven.
In a related matter, late this week, Senator Marco Rubio (R-Florida) put forth further changes to the Paycheck Protection Program in a bill being fast-tracked in the Senate. The proposed changes would:
- Extend covered period for 7(a) loans from June 30, 2020 to Dec. 31, 2020;
- Extend PPP loan lifetime from 8 weeks to 16 weeks, and ensure borrowers who have maintained payroll for 8 weeks will not lose forgiveness eligibility due to the extension to 16 weeks;
- Allow borrowers to purchase PPE and make safety upgrades/investments with loan funds; and
- Ensure lenders are not held liable for the borrow certification and documentation during application.
As mentioned, the Senate adjourned without considering these reforms, but is expected to address the PPP in early June.