On June 5th, the President signed into law H.R. 7010, the “Paycheck Protection Program Flexibility Act of 2020,” a mouthful of a name for a very short but important bill for employers. The House and then the Senate had passed the bill on a very bipartisan basis. The sponsors in the House were Democratic Rep. Dean Phillips and Republican Rep. Chip Roy.
The Paycheck Protection Program (PPP) was part of the CARES Act passed in March, but the money appropriated for it ran out in just days. Congress then topped it up again, and as of June 6th over $130 billion remained to be loaned out.
The new law addressed a number of important issues for employers, as it extended the time within which a business can spend the loan from eight weeks to 24 weeks (or until December 31st), sets a deadline for businesses to apply for forgiveness to ten months from the end of their spending period, increases the amount an employer can spend on non-payroll expenses to 40% of the loan amount, allows businesses until December 31st instead of June 30th to bring back laid-off workers if they are seeking forgiveness, and extends the loan term for any unforgiven amounts from two years to five years, according to the Society for Human Resource Management and the San Antonio Business Journal.
The Business Journal has pointed out some things the new law did not change, including: the deadline to apply for a PPP loan is still June 30th, the program still does not include 501(c)(6) organizations, the loan amount is still based on 2.5 times the business’ payroll, and each entity can have only one loan (i.e., you can’t apply for another loan once you’ve gotten one).
This is likely not the end of the PPP saga, but the new law has at least caused many employers to heave a sigh of relief.