On June 3, the U.S. Senate passed federal legislation to make it easier for entities to utilize loan forgiveness under the Paycheck Protection Program (PPP) authorized in the CARES Act.
The legislation, known as the Paycheck Protection Program Flexibility Act
, passed the U.S. House in late May and is expected to be signed soon by President Trump.
Under the PPP
, which is run by the U.S. Small Business Administration, small businesses and nonprofits with fewer than 500 employees, including eligible hospitals, are eligible for loans to cover up to eight weeks of payroll and other expenses. Entities may also apply for loan forgiveness, with the amount of forgiveness based on keeping employees on payroll or quickly rehiring them. Under the PPP Flexibility Act, employers who receive these loans will now have 24 weeks instead of eight to use funding received. Under the act, the PPP will not penalize entities for an inability to rehire employees or similarly qualified employees if the employer makes a good faith effort to do so, or documents an inability to return to the same level of business activity. Entities will also have further flexibility on how the dollars are spent, allowing them to use 40% of loan forgiveness on mortgage interest, rent and utilities (the other 60% must be used on payroll), and extending the period on which repayment can be deferred from six months to one year.
This legislation comes a little more than a month after Congress passed legislation adding money to the PPP program after funds previously authorized under the CARES Act for the PPP had run out. According to Senate Majority Leader Mitch McConnell, the program has sent out more than half a trillion dollars and has been utilized by three-quarters of all small businesses.
Please contact WHA’s Director of Federal & State Relations, Jon Hoelter
, for more information.