UPDATE: President Signs Paycheck Protection Program Flexibility Act
UPDATED 6/5/2020 at 11:40 am
The U.S. House of Representatives recently passed H.R. 7010: The Paycheck Protection Program (PPP) Flexibility Act. Since the House is not is full session the bill passed under special rules established to expedite legislation. The rules require a two-thirds vote for passage instead of a simple majority.
The newly passed bill will make it easier for small businesses and other recipients of the PPP funding to qualify for forgiveness of the loans. The bill increases the ability for small businesses to have their PPP loan fully forgiven and will change forgiveness compliance.
The former legislation had an inherent lack of flexibility which created unnecessary challenges when small businesses signed up for PPP funding.
H.R. 7010 extends the time PPP recipients must spend their funds from eight weeks to 24 weeks. The measures of the loans are lowered to 60% from the previous 75% the portion of PPP funds borrowers must spend on payroll costs to qualify for the full forgiveness of the loan. This would allow the borrowers to use more funds for other costs such as rent and utilities.
The bill also increases the minimum term period for the loans from two years to five years. This will allow small businesses whose loans are forgiven to delay the payment of payroll taxes.
Also, this bill allows borrowers to defer principal and interest payments on PPP loans until the Small Business Association (SBA) compensates lenders for any forgiven amounts, instead of the current six-month deferral period. Borrowers that do not apply for forgiveness would be given at least 10 months after the program expires to start making payments.
Ealier this week, the Senate voted to approve H.R. 7010 by unanimous consent. In the Senate a few provisions were added. The Senate version of the bill extends the PPP loan forgiveness period to include costs incurred over 24 weeks after a loan is issued or through Dec. 31st, which ever comes first. However, businesses that received a loan before the measure is enacted could keep the current eight-week period.
The new version also establishes a minimum loan maturity period of five years following an application for loan forgiveness, instead of the current two-year deadline set by the SBA). That provision would apply to PPP loans issued after the measure is enacted, though borrowers and lenders could agree to extend current loans.
The Arizona Farm Bureau (AZFB) is pleased with this bill and fully supports the signing. The AZFB is eager for Arizona small businesses and agricultural producers to receive the benefits to help maintain and their production in this time of uncertainty.
If there are further questions about funding or access to PPP loans, please visit the COVID-19 Resources Page or reach out to the government relations team.