Passed by both houses of Congress and just signed into law by President Trump, new legislation is designed to expand the parameters of the in-demand Paycheck Protection Program.
The legislation, officially called the Paycheck Protection Program Flexibility Act, will now give borrowers up to 24 weeks, ending on December 31 of this year, to spend the proceeds of loans, up from the previous 8 weeks.
The act also extends the amount of time required to pay off loans from the previous 2 years to 5 years.
In addition, a former requirement that 75 percent of loan proceeds must be spent on payroll costs has now been reduced to 60 percent.
The act holds out the possibility, depending upon the circumstances, of many loans being fully forgiven.
In a statement, Minnesota Representative Dean Phillips, one of the authors of the legislation, said a more flexible approach to how the Paycheck Protection Program is administered means that “millions of small business owners in this country are one step closer to meaningful relief.”
The Payroll Protection Program, as part of this year’s massive Coronavirus Aid, Relief, and Economic Security Act, has been tapped into by an estimated 4.5 million small businesses nationally.
A recent survey conducted by the Nashville-based National Federation of Independent Business revealed that 77 percent of responding businesses said they have received PPP loans, with the vast majority of that figure using the loans immediately.
The loans have proven particularly helpful to small construction companies, noted Stephen Sandherr, executive director of the Associated General Contractors of America.
Sandherr said the new legislation will “save many construction jobs and allow thousands of construction firms to remain in business.”
One thing the new legislation has not changed: the June 30 deadline to apply for a PPP loan.
By Garry Boulard