NAICU Washington Update

Senate Passes Paycheck Protection Flexibility Bill

June 05, 2020

Following passage in the U.S. House of Representatives last week, the Senate took quick action in passing the Paycheck Protection Program (PPP) Flexibility Act of 2020, which was signed into law by President Trump on June 5.

The bill makes adjustments to the Small Business Administration’s (SBA) lending program for businesses and nonprofits with 500 or fewer employees that is part of the CARES Act. 

In an effort to more accurately reflect the impact of COVID-19 on businesses, the bill modifies loan forgiveness requirements by allowing flexibility in how payroll costs are calculated. Specifically, the bill reduces the amount of the funds that must be used for payroll costs from 75 percent to 60 percent.

The bill also extends the “covered date” in which the funds must be used to 24 weeks after origination or December 31, 2020, whichever comes first and allows PPP recipients to take advantage of the delay in employer payroll taxes provided to other employers in the CARES Act. 

Importantly, rather than calculating loan forgiveness based on the number of FTE employees retained over the covered period, the bill provides an exemption based on employee availability for the period of February 15 through December 31, 2020.

Senate passage came despite concerns expressed by Sen Marco Rubio (R-FL), chair of the Senate Committee on Small Business and Entrepreneurship, that the legislation might make it harder for employers to obtain loan forgiveness. Sen. Rubio and Sen. Collins (R-ME) stated that they will continue to work on technical fixes to the program.

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