House passes Paycheck Protection Program Flexibility Act
By a vote of 417-1, with 1 Republican voting no and 13 Republican Members not voting, a few minutes ago, the House passed HR 7010, the Paycheck Protection Program Flexibility Act.
The bill, which was negotiated and amended on a bipartisan, bicameral basis, would make several changes to the Paycheck Protection Program (PPP). Namely:
New loans could be issued through the end of the year instead of through June 30. Businesses would have 24 weeks instead of 8 weeks to use the loans and remain eligible for loan forgiveness. Any loan proceeds used after December 31 would not be forgiven.
The bill would reduce to 60% from the current 75% required ratio the minimum loan amounts that must be used for payroll in order to qualify for full loan forgiveness. Borrowers would be required to apply for loan forgiveness within ten months of the end of the bill’s 24 -week loan usage period, after which time they would be required to begin loan repayments of amounts not forgiven.
Non-forgiven loan amounts for PPP loans issued after the bill’s enactment would become a loan with a minimum five year loan term along with payment deferral and a low interest rate, rather than the two year loan term currently specified under the CARES Act, although lenders would be free to convert existing two year PPP loans for non-forgiven amounts to a minimum five year term.
The bill does not increase the authorized loan limit for the PPP or the $10 million limit on the size of an individual PPP loan. The bill provides employers with greater flexibility and would still allow loan forgiveness if such employers are unable to rehire a laid off employee who worked for the business on or before February 15, or to hire similarly qualified individuals for unfilled positions before December 31, or to return to a pre-pandemic level of business activity due to compliance with social distancing, safety or public health guidance.
As differences remain between the now-passed House bill and pending Senate versions of a PPP reform bill, it remains to be seen whether the Senate will take up the House bill in a pro forma session or when it returns next week or instead at some point take up a Senate version of a PPP reform bill.
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