By: Scott Borsack
Yesterday the US House of Representatives overwhelmingly passed HR 7010, the Paycheck Protection Program Flexibility Act of 2020 (by a vote of 417 to 1) which if approved by the Senate and signed by the President will make significant adjustments to the Paycheck Protection Program. Specifically the bill does the following:
- extends the loan repayment period to a minimum of five years;
- extends the spending period end date from June 30, 2020 to December 31, 2020;
- extends the period in which spending will be eligible for forgiveness to the earlier of December 31, 2020 or the date that is 24 weeks from funding of the loan from the current eight weeks;
- extends the last day on which to correct headcount or salary reductions to December 31,2020 from June 30, 2020;
- removes from the analysis former employees who are “unavailable” as defined in the Bill; and
- the SBA administrative rule which requires spending of no more than 25% on non-payroll expenses is increased to 40%.
The Senate has been unable to muster the votes to bring a less generous version of the Bill to the floor. The passage of the Bill in the House, however, with near unanimous support from Republicans might introduce new pressure in the Senate to move on something. If the Senate makes any changes to the Bill the legislation as revised would have to go back to the House or be resolved in conference. This is now the second attempt by the House to revise the PPP and in each instance the revisions have made the program more user friendly.
Keep your eyes on this piece of legislation. The timing is going to be very interesting. Stay tuned. More is sure to follow.
Please note that the content of this blog is provided for information and education only. Nothing stated herein is intended to create an attorney client relationship or to constitute legal advice.
Scott Borsack is a partner with Szaferman Lakind and chair of the Business Department. To contact Scott please email him at sborsack@szaferman.com or call 609.275.0400.
