House Passes Paycheck Protection Program Flexibility Act
On May 28, the U.S. House of Representatives passed by a vote of 417 to 1 the Paycheck Protection Program Flexibility Act of 2020.
The Paycheck Protection Program Flexibility Act of 2020 provides small businesses with more flexibility in how the Paycheck Protection Program (PPP) funds established under the CARES Act are spent and still qualify for loan forgiveness.
The PPP provides businesses with fewer than 500 employees, including ambulance service organizations, with access to loans at favorable terms to cover employee payroll for an original timeframe of eight weeks. Under the CARES Act, a borrower can have all or a portion of the loan forgiven depending on the percentage of retained employees.
The Paycheck Protection Program Flexibility Act extends the timeframe in which to spend PPP funds from the current 8 weeks to 24 weeks and extends the original deadline from June 30, 2020 to December 31, 2020 for businesses to rehire furloughed employees to qualify for loan forgiveness. The legislation also lowers the minimum percentage of loans that must be allocated towards payroll from 75% to 60% and clarifies a borrower does not have to start repaying a loan until the SBA determines whether or not the business is eligible for loan forgiveness.
Further, the bill amends the program so loan forgiveness will not be affected by an inability to rehire all employees if an employer is unable to rehire a former employee, can demonstrate an inability to hire similarly qualified employees before the deadline, or can demonstrate an inability to return to their pre-COVID level of business activity.
The final provision of the Paycheck Protection Program Flexibility Act removes restrictions on deferment of payroll taxes and PPP loan forgiveness, allowing small businesses to both qualify for loan forgiveness under the PPP and delay their 2020 payroll taxes.
The AAA leadership and staff will continue to tirelessly advocate for the much-needed relief to ensure that our members can keep their doors open, receive the equipment necessary to protect their staff, and the resources to provide excellence in mobile healthcare. We will keep you abreast of our advocacy efforts as well as changes to the Paycheck Protection Program as soon as the details become available.