New PPP Law Helps Eligible Providers

On June 3rd, the Senate passed the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010) that updates to the Paycheck Protection Program implemented in response to COVID-19. The House passed the bill by a vote of 417-1 and the President is expected to sign the legislation as early as today. The bill will – 

? Extend the minimum maturity of PPP loans to five years. 

   o This will apply to any PPP loan made on or after such the day that the President signs the bill; however, lenders and borrowers may mutually agreeing to modify the maturity terms of prior-disbursed PPP loans.

? Extend the covered period for using PPP loan proceeds from June 30, 2020, to December 31, 2020.

? Extend the covered period for PPP loan forgiveness from eight weeks from the date of origination to the earlier of 24 weeks from the origination date or December  31, 2020. 

   o A borrower who received a loan before the bill's enactment could elect to continue using the 8-week covered period set forth in the CARES Act.

? Extend the deadline for the re-hire exception to forgiveness reduction in the loan forgiveness provisions from June 30, 2020, to December 31, 2020.

   o Providing that at least 60 percent of PPP loan proceeds should be used for payroll costs to receive loan forgiveness (overturning the 75 percent standard set forth by the SBA and Treasury Department).

? Eliminate the six-month deferral of payments due under PPP loans and replacing it with deferral until the date on which the amount of forgiveness determined under the CARES Act is remitted to the lender. 

? Allow all employers to take advantage of the CARES Act deferral of the 6.2 percent employer portion of social security payroll taxes, regardless of whether they have had a PPP loan forgiven.

For a more detailed summary of the changes made from the National Law Review, click here.