On May 26, 2020, the bipartisan Paycheck Protection Program Flexibility Act of 2020 (H. R. 7010) was introduced in the House of Representatives to address some of the major concerns voiced by Paycheck Protection Program (PPP) borrower with regard to forgiveness and to modify other provisions of the Program.
PPP borrowers across the county have expressed major concern with the loan requiring funds be spent over the 8 week covered period following receipt of the loan proceeds. Many businesses, the most severely impacted, are only now beginning to see relaxed rules or information about reopening plans from their states. The PPP required borrowers to restore both their headcount and salary levels to pre pandemic levels by the end of the covered period or June 30th.
However, many businesses are 6 weeks into their covered period and have yet to spend any of the loan proceeds. Many borrowers remain closed to the public by government mandate. Borrowers are reporting reluctance from employees to return to work/ payroll as a result of receiving a $2,400 per month Pandemic Unemployment benefit in addition to their traditional unemployment.
Borrowers would be using the money to pay people to stay home. For restaurants and other businesses forced to limit capacity upon reopening, PPP flexibility would be a critical lifeline to successfully reopen their businesses while following government safety measures.
This Bipartisan bill addresses these concerns and introduces several modifications to the program. They are listed below:
- Covered period is extended from June 30, 2020 to December 31, 2020 and the 8 week period is increased to 24 weeks or December 31, 2020 (whichever is earlier).
- The bill adds an exemption for reduction in forgiveness related to the FTE count if an eligible recipient:
- is unable to rehire an individual who was an employee of the eligible recipient on or before February 15, 2020;
- is able to demonstrate an inability to hire similarly qualified employees on or before December 31, 2020; or
- is able to demonstrate an inability to return to the same level of business activity as such business was operating at prior to February 15, 2020.
- Eliminates the limitation for non-payroll portion of a forgivable covered loan amount, and
- Option to elect to have covered period remain 8 weeks after origination
- Allows deferral of payroll taxes beyond PPP forgiveness decision.
A similar measure with bipartisan support in the Senate would extend the deadline to apply for a loan to the end of the year from June 30 and double the current eight-week period during which businesses must use funds to have loans forgiven.
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Brinker Simpson & Company, LLC
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