Senators Vote for New Flexibility in Paycheck Protection Program to Better Meet Small Business Needs
U.S. Senators Lisa Murkowski and Dan Sullivan (both R-Alaska) last night joined their colleagues in passing H.R. 7010, the Paycheck Protection Program Flexibility Act, legislation that would provide greater flexibility for small businesses to use Paycheck Protection Program (PPP) funds and survive the economic challenges caused by the COVID-19 pandemic. Among other key components of the new legislation, H.R. 7010 would increase the PPP loan forgiveness period from eight to 24 weeks, reduce the required percentage of expenses dedicated to payroll from 75 percent to 60 percent for the loan to be forgiven, and increase the loan repayment period from two to five years.
“Small businesses, which make up over 90 percent of Alaska’s businesses, have been undeniably impacted by the current pandemic. We worked to provide direct relief quickly to our small businesses as many have come to rely on the support of the Paycheck Protection Program or PPP,” said Senator Murkowski. “This bill improves our previous efforts by making fundamental changes to the PPP, such as increasing the loan forgiveness period from 8 weeks to 6 months, giving borrowers five years to repay the loan instead of two years, expanding the deadline for employers to rehire furloughed and laid-off employees and still qualify for loan forgiveness, and improving access to these vital loans. I’m proud to support this bipartisan legislation that will provide our small business owners and their employees, especially our seasonal businesses, with the flexibility they need, and I look forward to the President signing it into law.”
“The PPP has served as a critical lifeline to keep our incredible small businesses afloat through the peak of the coronavirus pandemic,” said Senator Sullivan. “I am glad to see these commonsense changes to the program pass the Senate, changes that will undoubtedly give small businesses greater flexibility and the ability to keep their workers on the payroll. A number of these fixes are the direct result of conversations I and many of my colleagues have had with small business owners in our own states. I thank each of them for their patience and their engagement as we work to weather this storm and come through stronger and more resilient than before.”
The Paycheck Protection Program was initially authorized in late March with the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Since the law’s implementation, numerous legislative and regulatory fixes have been put into effect to ensure the funds are benefiting small businesses as intended.
Among the key components of the legislation, the PPP Flexibility Act:
- Increases the loan forgiveness period from eight to 24 weeks;
- Reduces the required percent of loan funds that must be used for payroll expenses in order to be forgiven from the current 75 percent down to just 60 percent, increasing the amount of funds that can be dedicated to other qualifying non-payroll expenses, like rent, utilities, and interest;
- Increases the loan repayment period from two to five years, offering a recipient more time to recover and pay back any loan amount that is not forgiven;
- Allows PPP recipients to defer payroll taxes this year, eliminating the prohibition on small businesses availing themselves of both PPP loan forgiveness and tax relief;
- Extends the deadline to rehire employees without a forgiveness penalty.