The House of Representatives passed a provision to grant flexibility to small businesses receiving forgivable loans from the Small Business Administration’s (SBA) Paycheck Protection Program (PPP).
The Paycheck Protection Flexibility Act (H.R. 7010) is a bipartisan addition to the PPP loan program, and passed nearly unanimously, 417-1. This will significantly change the loan forgiveness application and will make it easier for most businesses to get full loan forgiveness. The Senate is coming back next week to address this bill, while it is expected to ultimately pass, we can expect some changes to the House bill, before it goes to the President for signature.

Key Points of PPP Flexibility Act –H.R. 7010:

• Allowing forgiveness for expenses beyond the 8-week covered period to 24 weeks and extending the rehiring deadline;
• Increasing the current limitation on non-payroll expenses (such as rent, utility payments and mortgage interest) for loan forgiveness from 25 to 40 percent;
• Extending the program from June 30 to December 31;
• Extending loan terms from two to five years;
• Ensuring full access to payroll tax deferment for businesses that take PPP loans. This is the employer Fica deferral that was to end upon loan forgiveness notification.

Impact of Pending PPP Legislation

• Significantly increases the ability to have loans fully forgiven by providing more time to use the PPP loan funds
• It will change forgiveness compliance and you will need to update calculators or worksheets.
• Simplifying loan forgiveness from a scenario planning standpoint as a stretched period will make planning easier
• Provides businesses more choices on how they use the funds.

This bill does not address the deductibility of the expenses paid via loan forgiveness, which is currently not allowed per IRS Regulations.

You can download a copy of the entire bill by clicking here

DDK has established a dedicated PPP loan forgiveness team to assist you in planning and applying for loan forgiveness. You can contact the team by sending an email to pppteam@ddkcpas.com or click here to fill out a form to contact our PPP Task Force and we will be glad to provide you guidance and insights based on your unique situation.