By Nick Goldstein & Dean Franks, ARTBA
Businesses have more flexibility to save jobs and revitalize the pandemic-hammered economy under legislation approved May 28 by the U.S. House. The measure now heads to the Senate.
H.R. 7010, the “Paycheck Protection Flexibility Act of 2020,” makes key changes to the emergency small business loan program, known as the PPP, which became law in March. So far, however, regulations have hampered the program’s effectiveness.
The latest House bill makes a number of changes to remove some of these burdens. These changes, recommended by ARTBA and other industry allies in a May 21 letter, include:
- Increasing flexibility in how loan recipients can spend PPP funds by changing the amount of the loans which can be spent on non-payroll costs from 25 percent to 40 percent;
- extending the time period to spend the funds from eight weeks to 24 weeks; and
- providing additional flexibility to extend the program’s “safe harbor” date for rehiring employees and restoring their pay.
The House legislation also extends the program application deadline to Dec. 31 from June 30, and increases the loan term to five years from two years.
The Senate may vote on similar legislation as soon as the week of June 1.
In a separate May 25 letter, ARTBA and 13 other industry associations asked the Office of Management and Budget to clarify that PPP recipients should not have to credit back the amount of the loans to government agencies as part of federal contracts. The groups are responding to U.S. Department of Defense (DOD) guidance asserting that PPP funds used on its contracts must be credited to the agency. If contractors must credit the proceeds of properly utilized PPP loans to the government, “then these loans are not truly forgivable,” the letter says. “Such treatment would be inconsistent with the stated provisions of the PPP loan program.”
ARTBA will continue to work with Congress and federal agencies on issues relating to the administration of the PPP.