PPP Forgiveness Rules May Be Loosened

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Concerns about time restrictions and payback periods in the federal Paycheck Protection Program (PPP) have led the U.S. House of Representatives to pass a bill on Thursday that, if signed into law, would make it easier for PPP loan recipients to qualify for forgiveness.

The Paycheck Protection Flexibility Act (H.R. 7010) would extend the period PPP recipients have to spend the proceeds of their loans from 8 weeks to 24 weeks and would also lower the portion of the loan required to be spent on payroll from 75% to 60%. This would allow borrowers to allot more funds to pay allowable costs that include rent, utilities, and mortgage interest. The legislation would also extend the minimum repayment term of a PPP loan from two years to five years and allow companies whose loans are forgiven to delay payment of payroll taxes.

The U.S. Senate has also taken up the PPP cause, but with less flexible terms. The Senate version of the bill would double the time allowed to spend PPP funds from 8 weeks to 16 weeks but retain the requirement that 75% of the funds be used for payroll.

We will continue to follow the progress of both of these bills and any compromise version that emerges. If you have any questions about the PPP loan program please contact Gray, Gray & Gray at (781) 407-0300.

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