Late Tuesday night, merely a few hours before the application window for the Paycheck Protection Program (PPP) was about the close, the Senate unanimously approved a 5-week extension. On Wednesday the House passed the extension, which now sends the bill to President Donald Trump, who is expected to sign it.
$130 BILLION OF FUNDS AVAILABLE
Earlier on Tuesday, Treasury Secretary Steven Mnuchin had told a House panel that he is planning to work with Congress to help pass additional legislation by the end of this month in order to free up remaining PPP funds to those small businesses that were hit hardest by the pandemic, hotels and restaurants for example. Both Senate Democrats and House Republicans have proposed bills to help save as many small business as usual.
Out of the $2.6 trillion that the government is spending in response to Covid-19, $670 billion was assigned to the PPP. About $130 billion of that amount remains unclaimed to date. That is a bit of a surprise as there was an intense demand during the early weeks of the program, and the concern that the economic fallout from the pandemic is far from over.
PPP BECOMES MORE FLEXIBLE
On top of this news from the Senate, we would like to remind you of the release of a new 34-page Interim Final Rule last week. The new guidance makes revisions to previous guidance to reflect the Paycheck Protection Program Flexibility Act of 2020, P.L. 116-142, which became law on June 5 and made significant changes to the PPP. The most important changes included:
* The covered period during which PPP loan recipients can spend the funds and still qualify for loan forgiveness was expanded from 8 to 24 weeks. The 24-week period applies to all loans made on or after June 5. Borrowers that received loans before June 5 can choose to elect an eight-week period.
* The proportion of PPP funding that must be used on payroll costs to qualify for full forgiveness was lowered from 75% to 60%
* The term for new loans was expanded from two to five years. Borrowers with loans received before June 5 can extend their loan term to five years if their lender agrees.