Fixes to Paycheck Protection Program on the Way?
As small business owners begin to navigate the loan forgiveness portion of the Paycheck Protection Program it has become clear many will not be able to achieve full forgiveness because they will not be able to spend all of the funds in an 8-week Covered Period. In addition, business owners are hesitant to bring employees back on payroll while they are closed or have little work for them to do. Many have struggled with the idea that at the end of the 8-week window they will have a debt that is required to be paid back in 2 years.
Help may be on the way! More than one bill has been introduced in the House, including the HEROES Act, to add flexibility to the program, however, until now there has not been bipartisan support. News coming out of Washington now indicates there is bi-partisan support to fast-track legislation that provides the flexibility so many have been hoping would come. Nancy Pelosi announced yesterday that the House would vote next week on stand-alone legislation changing the original terms of the program. Changes expected include:
- Extending the Covered Period – it is unknown how long of an extension, we have heard 12, 16 and even 24 weeks
- Eliminate the 25% non-payroll expense restriction for forgiveness – this will help businesses with higher rent and utility costs
- Extend the loan repayment terms beyond the 2-years – this will require amended loan agreements as many loan documents have already been signed
- Extending the rehiring deadline past June 30th – since many unemployment insurance programs are offering benefits at higher rates, businesses are struggling to bring back employees.
Marco Rubio announced yesterday that he believes such legislation will have the full support of the Senate if it is in fact a stand-alone bill and there is nothing added to it, although the Senate adjourned last night and isn’t expected to return to vote on anything until June 1. Personally, I hope they also include a provision that all expenses paid with forgivable funds will be deductible. We will keep you posted as we learn more.