House approves Paycheck Protection Program Flexibility Act
The U.S. House of Representatives approved the Paycheck Protection Program Flexibility Act on Thursday by a vote of 417-1.
Rep. Diana DeGette of Colorado was among many who supported the legislation, which makes changes to the Paycheck Protection Program so that the program is more accessible and usable to small businesses that need it most.
“It has become clear that the current one-size-fits-all structure of the Paycheck Protection Program is not working for all small businesses in our community,” said DeGette. “By making the Paycheck Protection Program more flexible, this bipartisan legislation will ensure small businesses can get the help they need to weather this ongoing crisis.”
Some small business owners were not applying for the federal relief program because they did not believe they could meet the current requirements for making the loan forgivable.
Under current regulations issued by the Trump Administration, the PPP loans require that no more than 25 percent of loan proceeds can be spent on non-payroll expenses such as rent, mortgage interest, and utilities.
This limitation has prevented many small businesses including independent restaurants from applying to the program because their rent is significantly more than 25 percent of their monthly expenses.
The PPP Flexibility Act raises that percentage from 25 percent to 40 percent.
The PPP Flexibility Act will also increase flexibility and access to PPP loans by:
- Allowing forgiveness for expenses beyond the 8-week covered period to 24 weeks and extending the rehiring deadline
- Increasing the current limitation on nonpayroll expenses (such as rent, utility payments and mortgage interest) for loan forgiveness from 25 to 40 percent;
- Extending the program from June 30 to December 31
- Extending loan terms from two to five years
- Ensuring full access to payroll tax deferment for businesses that take PPP loans