The House has introduced a new Paycheck Protection Program (PPP) bill, which can now enjoy by all types of small business owners, including the self-employed.
The latest changes in the Paycheck Protection Program has now amended the irregularities in the existing loan forgiveness rules. The new bill, which demanded by several Main Street advocates, now offers small businesses to use the grant flexibly.
House passes PPP Flexibility Act
With a nearly unanimous vote of 417-1, the House of Representatives has approved the legislation of the Paycheck Protection Program Flexibility Act on Thursday, May 28. The new bill addresses small biz owners’ concerns surrounding the loan forgiveness policies.
Its legislation came following the debate about whether to pass another stimulus package in the future or not. Concerns about the previous loan forgiveness rules also forced lawmakers to tweak the policies under the PPP.
In the previous act, loans need to be spent in a certain way and within the allotted timeframe. Otherwise, the recipients who want to avail of loan forgiveness will be rejected.
“People thought two months was probably going to be enough to get it done. It turned out, it’s not,” Paul Becht told CNBC.
With its new policies, however, it seems like small businesses with low to zero payroll expenses will benefit significantly from it.
What are the new rules under the new bill?
Based on the policies under the previous Paycheck Protection Program, loan recipients can only avail loan forgiveness if they will spend the money within the eight-week timeframe. Claimants are also required to allocate 75% of the grant in payroll, while the remaining 25% should go on other expenses.
The said ratio, however, was seen unachievable, according to a survey conducted by the National Federation of Independent Business (NFIB).
The PPP Flexibility Act now provides the chance for those with small payroll expenses—the self-employed, for instance—to spend the grant in non-labor.
Here are some of the changes in PPP’s loan forgiveness rule:
- Small business operators can now spend the grant within 24 weeks or six months
- Companies that availed loan forgiveness can postpone payroll taxes
- Deadline for rehiring laid-off workers is now until June 30
- Owners can now use 60% of the money on payroll instead of 75%
- Loan repayment date is extended
Reportedly, both parties have agreed to pass the new changes due to conflicts concerning the next phase of the stimulus package.
Vice president Kevin Kuhlman of NFIB also reiterated the urgency to give small business operators the flexibility in “loan forgiveness period” and “payroll limitations.”
As of this writing, the House of Representatives has not spoken about the second round of the stimulus package.