President Donald Trump signed the Paycheck Protection Program Flexibility Act into law shortly after the Senate unanimously passed a legislation making changes to the Paycheck Protection Program (PPP) a week after the House of Representatives voted to pass the bill. The legislation, the Paycheck Protection Program Flexibility Act, would provide direct relief to small businesses amid the coronavirus pandemic and make loans more accessible.
The bill, backed by the National Lumber and Building Material Dealers Association (NLBMDA) and 54 other outside organizations, would provide greater flexibility to small businesses when utilizing PPP loans.
“NLBMDA is pleased that the White House and both parties in Congress came together to pass significant improvements to the Paycheck Protection Program,” Jonathan Paine, president and CEO of the NLBMDA, said in a prepared statement. “NLBMDA has been making the case that these changes are crucial for LBM dealers and this win will ensure greater flexibility for small businesses that utilize the PPP. NLBMDA will continue to press Congress to pass a Phase 4 relief package that fully reflects the priorities of the lumber and building material industry.”
The Paycheck Protection Program Flexibility Act would change the PPP sunset date from June 30 to December 31 and allow forgiveness for expenses beyond the eight-week covered period to 24 weeks. The legislation would also increase the current limitation on non-payroll expenses for loan forgiveness from 25% to 40% and lengthen the loan maturity date from two to five years. The bill would ensure full access to payroll tax deferment for companies that take PPP loans, would extend the loans forgiveness rehire date to December 31, and would create a safe harbor for businesses that make a good-faith effort to hire or re-hire qualified employees. Under the proposed legislation, borrowers who have received PPP loans prior to the enactment of the new bill would be able to choose whether the covered period of their loan lasts eight weeks or 24 weeks.
Under the PPP, small businesses--companies with 500 employees or fewer--can apply for partially forgivable loans that can cover operating expenses. Originally allocated $349 billion as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, funding for the PPP ran out within two weeks. The government was quick to approve a bill including an additional $310 billion for the PPP.