Barring a denial from President Donald Trump, the U.S. Senate’s unanimous decision Wednesday to concur with House Resolution 7010 will mean that borrowers under the Paycheck Protection Program will have greater flexibility in meeting the loan forgiveness provisions of the program.
The measure that passed has numerous provisions, but those of most interest to small businesses have to do with the loan forgiveness.
The PPP originally was part of the $2 trillion CARES Act, which passed Congress to help businesses and other entities recover from the COVID-19 pandemic.
The original program requirements permitted loan forgiveness if 75% of loan proceeds were spent on payroll and if the money was expended within eight weeks of loan origination.
HR 7010 lowers the payroll requirement to 60% and extends the period for use of the money to 24 weeks.
“This corrects what were proven defects in the program,” said Mike O’Connell, Larimer Small Business Development Center director. “There wasn’t enough time to maximize the program when a lot of businesses (with PPP loans) were closed under stay-at-home orders,” he said, in reference to the eight-week time period.
He said the change in the ratio to 60% payroll, instead of 75%, helps because many businesses, particularly retailers, have allowable expenses such as rent that are a larger share of their overall costs.
O’Connell said businesses still need clarification about how the PPP forgiveness calculation will work. The existing rules are too complicated, he said.
In addition to the program length and payroll ratio changes, the measure before the president also extends loan maturity from two years to five years and gives employers longer — until Dec. 31 instead of June 30 — to replace laid-off employees or restore salaries to levels that existed in February.
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U.S. Senate concurs with House on PPP loan changes - Loveland Reporter-Herald
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