The House of Representatives just approved a stand-alone rule that aims to alleviate snags small business leaders face under the Paycheck Protection Program (PPP). Launched by Representatives Chip Roy (R-TX) and Dean Phillips (D-MN), the new act, titled the Paycheck Program Flexibility Act of 2020, was given the green light on May 28 and is now on its way to the Senate.
The PPP was crafted under the CARES Act and later amplified under the Paycheck Protection Program and Health Care Enhancement Act to assist small businesses hurt by the COVID-19 crisis by covering their near-term operating costs and offering incentives to retain workers. While funds disbursed under the PPP loan program are first intended to help companies stay afloat, they are also utilized to assist in paying for retirement benefits. The new legislation modifies the PPP by:
- Expanding the expense forgiveness period from 8 weeks to 24 weeks and prolonging the June 30 hiring cutoff date;
- Augmenting the present restraint on nonpayroll costs, like utility payments, rent, and mortgage interests for loan forgiveness from 25% to 40%;
- Lengthening the loan forgiveness covered period from June 30 to December 31st;
- Prolonging loan terms from two years to five years;
- Ensuring complete access to payroll tax deferment for establishments with PPP loans.
Per Rep. Roy, the goal of the payroll tax deferment and the PPP was to provide establishments with capital to withstand the current pandemic and “receiving both should not be considered double-dipping.”
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