CARH Broadcast Email—Legislative Update
On June 3, the Senate, by unanimous consent, cleared H.R. 7010, the Paycheck Protection Program Flexibility Act of 2020, to extend the Small Business Administration’s Paycheck Protection Program (PPP).
The bill modifies provisions related to the forgiveness of loans made to small businesses under the (PPP) implemented in response to COVID-19. Specifics include:
- Extending the current eight-week period during which businesses must use funds to have loans forgiven to 24 weeks or December 31, 2020, whichever comes sooner.
- Establishing a minimum maturity of five years for a paycheck protection loan with a remaining balance after forgiveness. The bill also extends the covered period during which a loan recipient may use such funds for certain expenses while remaining eligible for forgiveness. The bill raises the non-payroll portion of a forgivable covered loan amount from the current 25% up to 40%.
- Extending the period in which an employer may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable amount of a paycheck protection loan. However, the forgivable amount must be determined without regard to a reduction in the number of employees if the recipient is (1) unable to rehire former employees and is unable to hire similarly qualified employees, or (2) unable to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19.
- Revising the deferral period for paycheck protection loans, allowing recipients to defer payments until they receive compensation for forgiven amounts.
- Allowing recipients who do not apply for forgiveness to have ten months from the program’s expiration to begin making payments.
- Eliminating the prohibition on deferment of payroll taxes under CARES Act §2302 for borrowers who receive loan forgiveness, meaning borrowers can now receive forgiveness and continue to defer 50% of their portion of the FICA tax until December 21, 2021, and the remaining 50% until December 31, 2022.
The House of Representatives passed the bill May 28, by a vote of 417-1. President Trump is expected to sign the legislation before the end of the week. The bill includes no new funding for the PPP program, which, as of the latest reports, still has nearly $100 billion left for distribution.
If you have not yet registered for CARH’s Virtual Annual Meeting & Legislative Conference scheduled for June 22-23, click here the for the Agenda and Registration form. You will not want to miss the discussions regarding this and many other relevant topics.