Senate Passes PPP Flexibility Act
On June 3, the U.S. Senate passed on voice vote the Paycheck Protection Program Flexibility Act of 2020. The legislation was passed by the House on May 28. The President is expected shortly to sign the bill into law.
The Paycheck Protection Program Flexibility Act (H.R. 7010) provides small businesses with more flexibility in how the Paycheck Protection Program (PPP) funds established under the CARES Act can be spent.
Under this new bill, borrowers who furloughed or laid-off workers will not be subject to a loan forgiveness reduction due to reduced employee count as long as they restore their pre-COVID employment by the new deadline of December 31, 2020. Businesses will also have 24 weeks instead of just 8 weeks to spend the funds.
This legislation lowers the minimum percentage of PPP loans that must be allocated towards payroll from 75% to 60% and clarifies a borrower does not have to begin repaying a loan until the SBA determines whether or not the business is eligible for loan forgiveness.
The PPP Flexibility Act also lifts the ban on borrowers whose loans were partially or completely forgiven from deferring payment of payroll taxes. The payroll tax deferral is now open to all PPP borrowers.
The PPP provides businesses with fewer than 500 employees, including ground 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 AAA will continue to press the Congress and federal agencies for help to ensure ambulance service organizations and our paramedics and EMTs serving on the front lines of the COVID-19 pandemic have the necessary resources and financial assistance to serve their communities.