On Thursday, May 28, 2020, the House of Representatives passed the Paycheck Protection Program Flexibility Act which allows more flexibility for small businesses that received a PPP loan. Under the new legislation, only sixty percent (60%) of funds from a PPP loan must be used for payroll costs in order for the full principal amount of the loan to be forgivable. This is a decrease from the seventy-five percent (75%) required under the original language of the CARES Act and allows small businesses to allocate more funds to non-payroll expenses like mortgage interest payments, rent, and utilities. Additionally, the legislation calls for an increase in the time period allotted to spend the PPP loan funds from eight (8) weeks to twenty-four (24) weeks. The existing June 30, 2020 deadline to rehire full-time equivalent employees or restore and reduced salaries would be extended to December 31, 2020.
The Senate has also expressed interest in legislation that allows for more flexible PPP loan terms. However, it is not yet known when a Senate vote may occur or whether there is enough support to pass this legislation.
