The U.S. Senate has passed by unanimous consent legislation introduced as the Paycheck Protection Program Flexibility Act of 2020, H.R. 7010. The bill which among other things extends the window for businesses to spend the loans granted under the program will now be passed along to President Trump for his signature. Key changes to the Paycheck Protection Program contained within the bill are as follows:
- Extends the time frame to use the loan funds from 8 weeks to 24 weeks, and provide a safe harbor for some FTE reductions.
- Reduces the percentage of the loan amount required to be used for payroll costs from 75% to 60%, which means that 40% of the funds received by the borrower could be used on qualifying non-payroll expenses.
- Increases the loan deferral period from 6 months to 10 months, and extends the loan term on any unforgiven loan amount from two years to five years.
The bill also contains language that has been interpreted as extending the PPP loan application deadline from June 30, 2020 to December 31, 2020. However, a “letter of intent” was entered into the Congressional Record which provides an assurance that the loan application deadline will not be extended beyond the original June 30, 2020 date.