On Thursday, May 28, 2020, the House of Representatives voted overwhelmingly in favor of the bipartisan Paycheck Protection Program Flexibility Act which, among other things, gives small businesses more time to use PPP loans and relaxes the 75/25 requirement for payroll costs. The bill stills needs to be approved in the Senate, where the specifics may change, and then signed into law by the President. The bill will likely not be finalized until sometime next week and it remains to be seen what final form the legislation will take.
The bill, as approved in the House, gives PPP loan recipients 24 weeks to spend the PPP loan proceeds and extends the program through the end of 2020, while also lengthening the maturity date and deferral period of the PPP loans. Additionally, the bill allows borrowers to spend just 60%, rather than 75% of their loan proceeds on payroll costs and still be eligible for full loan forgiveness. The bill would also allow businesses that receive loan forgiveness under the program to defer payroll taxes.
We will continue to monitor the legislation as it makes its way through Congress and provide updates as the final bill is signed into law. If you would like more information on the Paycheck Protection Loan or the loan forgiveness programs, please contact a member of our Corporate practice group at 585.232.6500 or 716.853.1616.
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