Last week, the House passed the Paycheck Protection Program Flexibility Act which will ease restrictions on the loan forgiveness under the program.
This House bill comes just after the Treasury Department issued “Interim Final Rules’ that made the PPP loan forgiveness even more complex. If these extremely harsh and complex rules stand, you will likely need a lawyer, accountant, and advanced degree in mathematics to figure out how to calculate the forgivable portion of the loan. Once again, ivory tower bureaucrats in the Treasury Department do not realize the administrative burden these rules place on business owners.
The House bill is great news and we’re optimistic that it will become law. The plan outlined in the House bill would offer the following:
- It reduces the amount of the PPP loan needed to be spent on payroll from 75% to 60%, thus increasing the amount of funds available for other expenses from 25% to 40%. These expenses still include rent, mortgage payments, utilities, and interest on loans.
- It extends the time-frame businesses have to use the funds from eight weeks to 24 weeks
- It pushes back a June 30 deadline to rehire workers to December 31, 2020
- Provides more leeway for business owners who show they could not rehire workers or reopen due to safety standards
- Extends the term of loan from two to five years
- It expands eligibility to defer payroll taxes
We encourage you to reach out to your Senators and encourage them to support The Paycheck Protection Program Flexibility Act. In the meantime, we urge you to delay your forgiveness filings with the bank to give the Senate and the President time to roll back the current harsh and complex Treasury Department rules.