In what amounts to an admission that the original forgiveness terms were too narrow, the US Senate approved the House version of the Paycheck Protection Flexibility Act Wednesday evening, June 3rd. The bill will make its way to President Trump’s desk, where he is expected to sign it into law.
The new legislation greatly expands the terms under which a PPP loan can be forgiven. Under the original PPP law, loans received by businesses could be forgiven, essentially turning into a grant, if they were used up within 8 weeks of receipt of the funds, and at least 75% going to payroll costs and no more than 25% going toward overhead such as rent, utilities, and loan interest.
The new rules are as follows:
These changes have been anticipated, and will no doubt be cheered by many businesses who participated in the PPP loan program, but were struggling to meet the expenditure and timing requirements. Just the portion of the new legislation that triples the expenditure time window will provide much relief these companies and nonprofits.