This bill — the Paycheck Protection Program Flexibility Act of 2020 — would provide small businesses that receive forgivable loans under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) with additional flexibility in terms of permitted uses, and extend both the forgiveness period & the maturity period of loan amounts that aren’t forgiven.
This bill would revise the requirement that small businesses spend at least 75% of PPP loan amounts on payroll and that no more than 25% on covered overhead expenses (including rent, mortgages, and utilities) to instead require that at least 60% of loan amounts be spent on payroll.
The PPP loan forgiveness period would be extended from 8 weeks after origination to 24 weeks after origination or December 31, 2020 — whichever is earlier — although recipients that want to use the 8 week period can do so. This bill would also give small businesses the same timeframe (the earlier of 24 weeks after origination or December 31, 2020) to rehire workers that are unable to do so in the near term, which is currently set at June 30, 2020.
The maturity period for amounts of newly originated PPP loans that aren’t forgiven would be extended from 2 years to 5 years, giving small businesses more time to amortize those amounts at the loan’s 1% interest rate. This provision wouldn't apply retroactively to previously originated PPP loans.
Additionally, this bill would prohibit the mutual exclusivity of PPP loans & payroll tax deferments, thus allowing small businesses receiving PPP loans to receive both forms of aid.