On Wednesday, the U.S. Senate unanimously approved a House bill that would significantly ease some requirements for companies that have received loans under the Paycheck Protection Program (PPP). The new PPP Flexibility Act makes two important changes to rules applicable to loan recipients. First, it extends the period of time for spending loan funds from eight to 24 weeks. Second, the bill lowers the required percentage of loan proceeds used for labor expenses from 75% to 60%.
These changes should assist small businesses that may not have the same level of labor expenses as larger companies. The extended loan usage period will also help businesses struggling to remain afloat during the COVID-19 pandemic. The new law does not address some of the PPP questions that have vexed loan recipients, such as the definition of economic necessity for the loan funds and the ability of U.S. subsidiaries of foreign corporations to qualify for PPP loans.
President Donald Trump is expected to sign the PPP Flexibility Act into law within the next several days. You can find a detailed breakdown of what it changes here.