Weekly Policy Update: Congress Passes New Law Creating More Flexibility in the Paycheck Protection Program
By: Colorado BioScience Association Date: 06/05/2020
On Friday, President Trump signed into law the Paycheck Protection Program Flexibility Act. The new law addresses many concerns raised by the small business community about the Paycheck Protection Program (PPP) that was created under the CARES Act. Below is a quick recap of the changes included in the new law.
- Reduces the amount of the loan needed to be spent on payroll from 75% to 60%, increasing the amount of funds available for other expenses.
- Extends the time period to use the funds from 8 weeks to 24 weeks. While businesses will still need to spend the money on payroll and authorized expenses, they now will have until the end of the year to do so.
- Pushes back the deadline to rehire workers from June 30 to December 31, 2020 and eases requirements for rehiring, adding new exceptions for a reduced headcount.
- Allows small businesses to take a PPP loan and also qualify for a separate, recently enacted tax credit to defer payroll taxes (which was previously prohibited).
- Extends the repayment term for portions of the loan that are not forgiven from 2 years to 5 years.
The new law passed with overwhelming bipartisan support and is an important step in addressing many issues with the Paycheck Protection Program. That being said, there are still questions that remain about the program and fixes that will likely need to be made in the future.
CBSA will continue to provide updates on legislative efforts that impact our ecosystem and share resources to support our members during this challenging time.