Paycheck Protection Program Flexibility Act Adjusts Popular Program

As businesses across the country slowly begin to reopen their doors, those entrepreneurs who took out Paycheck Protection Program (PPP) loans are getting some new updates. For the unfamiliar, the initiative was initially introduced as part of the better known CARES Act and brought $349 billion in loans to small businesses. However, the first round of funding ran out in less than two weeks, leading lawmakers to authorize another $310 billion. Through the entire process, the agency and Congress have also worked to close loopholes and further clarify policies that may not have been clear when the plan was put together. Now PPP is evolving once again thanks to the passage of the Paycheck Protection Program Flexibility Act, which President Trump signed into law this past week.

Among the changes that the newly-signed bill brings to the program, small business owners are now only required to use 60% of the loan for payroll in order to qualify for forgiveness whereas the original threshold was 75%. As CNBC reports, the updated bill also makes clear that, if a borrower uses less than 60% on payroll, they may still be eligible for partial loan forgiveness. Prior to this, some entrepreneurs feared that falling even a bit below the required amount would void their opportunity for forgiveness entirely.

Also important is that, while borrowers were originally given a timeframe of eight weeks to use the funds, this has now been extended to 24 weeks. Meanwhile, loans issued on or after June 5th will now have five year terms instead of the original two years. Finally, the bill officially names June 30th, 2020 as the last day to apply for PPP loans.

In a joint statement regarding the Paycheck Protection Program Flexibility Act, SBA Administrator Jovita Carranza and U.S. Treasury Secretary Steven Mnuchin said, “This bill will provide businesses with more time and flexibility to keep their employees on the payroll and ensure their continued operations as we safely reopen our country. We look forward to getting the American people back to work as quickly as possible.” The duo also praised a bipartisan list of leaders, stating, “We want to thank President Trump for his leadership and commend Leader McConnell, Leader Schumer, Speaker Pelosi, and Leader McCarthy for working on a bipartisan basis to pass this legislation for small businesses participating in the Paycheck Protection Program.”

Although the Paycheck Protection Program may not have been perfect in its original form and led to frustration for many small business owners, it’s hard to argue that the loan program wasn’t a net positive on the whole. Furthermore, it’s nice to see that the SBA and Congress have been listening to feedback and were able to make some much-needed adjustments. Hopefully, with these most recent changes, small business owners will be one step closer to getting back on their feet.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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