U.S. House Makes Changes To Paycheck Protection Program
In a 417-1 vote last week, the U.S. House of Representatives passed H.R. 7010, the Paycheck Protection Program (PPP) Flexibility Act, which would give entities that received forgivable PPP loans greater flexibility with regard to how they can spend the loan. If passed by the U.S. Senate and signed into law by President Donald Trump, H.R.7010 would require entities to spend only 60 percent of loan proceeds on payroll costs, rather than the 75 percent they are required to by current law.
The legislation also would:
- Extend the deadline to spend PPP loans to 24 weeks from eight weeks;
- Allow providers to postpone payroll tax payments;
- Extend the loan maturity of the unforgiven portion of a PPP loan to a minimum of five years; and
- Extend the covered period from June 30, 2020 to December 31, 2020.
As a reminder, the Metals Service Center Institute recently joined with other trade associations to send a letter to House lawmakers asking that they support the bill.
Unfortunately, the legislation has a tough road ahead of it in the U.S. Senate since some Republicans are concerned the provision that allows businesses to spend only 60 percent of loan proceeds on payroll costs is too rigid and could cause borrowers who do not meet that threshold to have none of their PPP loan forgiven. The Senate is expected to work on its own version of the bill in the coming week.
MSCI members are urged to use this portal from the National Association of Wholesalers to send a letter to their member of Congress supporting H.R. 7010. In other PPP news:
- On May 27, the U.S. Department of the Treasury released updated frequently asked questions for the PPP, which include answers regarding safe harbor and good-faith certification.
- The U.S. Small Business Administration said that, as of May 21, it has approved $512.2 billion of the $660 million appropriated for the PPP. Additionally, according to Reuters, net weekly lending through the program has been negative since mid-May since more companies returned loans than applied for them.
- The U.S. Chamber released a new video that provides a step-by-step explanation of the PPP loan forgiveness process.
As a reminder, the U.S. Chamber of Commerce also has released a step-by-step guide to calculate the loan forgiveness amount, navigate record-keeping requirements, and determine repayment terms on amounts not forgiven.
The American Institute of Certified Public Accountants also has useful information and tools on their website, including PPP loan calculators for different types of businesses with PPP loans.