H.R. 7010 Passes U.S. Senate Without Revision - Paycheck Protection Program Flexibility Act of 2020 (PPPFA)

H.R. 7010 Passes U.S. Senate Without Revision - Paycheck Protection Program Flexibility Act of 2020 (PPPFA)

Late in the day on June 3, 2020, the U.S. Senate passed H.R. 7010 by unanimous consent with virtually no changes to the bill passed six days earlier by the U.S. House of Representatives. It is anticipated the President will sign the bill into law as soon as possible.

As we highlighted in our previous post, the most significant provisions of this new bill are as follows: 

1.     Extends the covered period from 8 weeks to 24 weeks from date of loan origination or December 31, 2020, whichever comes first. (Loan recipients who received a PPP loan prior to the enactment of this bill may elect to retain their original 8-week covered period.)

2.     Replaces the June 30, 2020 “safe harbor” rehire date with the December 31, 2020 date.

3.     Eliminates the proportional reduction of forgiveness if:

A.     an employer can document in good faith they are unable to re-hire the same, or equally qualified, employees they had on February 15, 2020 on or before December 31, 2020, or

B.     the employer is able to document an inability to return to their same level of business activity at or before February 15, 2020 due to compliance with guidance issued by the Secretary of Health & Human Services, the Director of the Centers for Disease Control and Prevention or the Occupational Safety and Health Administration during the period March 1, 2020 to December 31, 2020, related to the COVID-19 pandemic.

4.     Reduces the amount of PPP Loan proceeds required to be spent on payroll related costs from 75% down to 60%.

5.     Establishes the repayment deferral period for unforgiven PPP loan proceeds to end when the amount of loan forgiveness is remitted to the lender (presumably by the SBA).

6.     Extends the repayment period of any unforgiven PPP loan amounts from 2 years to a minimum of 5 years.

7.     Requires loan repayments to begin 10 months after the last day of the covered period if no application for forgiveness is filed with the lender.

8.     Allows PPP loan recipients to be eligible to participate in the payroll tax payment deferral provisions of the CARES Act.

Although the bill was not changed by the Senate, we have seen the U.S. Small Business Administration make many interesting interpretations of various provisions of the PPP Loan Program and the proposed forgiveness calculations since the CARES Act was passed. It is anticipated we will see a new round of Frequently Asked Questions (FAQs) and Interim Final Rules to provide additional guidance on this bill.  

FMD is monitoring the progress of this bill closely and we will post and update as soon as we know more. In the meantime, please continue to visit our website for continuing updates on all COVID-19 related matters.