On May 28, 2020, the House of Representatives passed the Paycheck Protection Program Flexibility Act and it was subsequently approved by the Senate on June 3, 2020. The bill is now awaiting approval from President Trump.
If enacted, the PPP Flexibility Act will:
- Increase the “covered period” defining when a small business must spend their PPP loan proceeds to qualify for forgiveness from eight weeks to 24 weeks, or until December 31, 2020.
- Change the limit of PPP forgiveness that is allowed to be spent on nonpayroll costs from 25% to 40% of the total loan. This increase will change the requirement from 75% to 60% of the PPP loan that can be spent on payroll expenses in order to achieve maximum forgiveness.
- Extend the timeframe to restore workforce and compensation from June 30, 2020, to December 31, 2020, to avoid a reduction in the forgiveness amount.
The Flexibility Act modifies other aspects of the original CARES Act. Once finalized, CRI will provide more information on the underlying details.