The House of Representatives, last night, passed H.R. 7010, which would loosen requirements on hundreds of billions of dollars in small-business loans made through the Small Business Administration’s Paycheck Protection Program (PPP). The bill enjoyed widespread bi-partisan support, including six members of the New Jersey Congressional delegation who joined as co-sponsors.
The legislation is in response to concerns voiced by NADA, various other national and state trade associations and thousands of business owners struggling to stay open during the coronavirus pandemic.
The House bill makes several significant changes to the PPP, including the following:
- It changes the 8 week covered period to 24 weeks. PPP loan recipients will have 24 weeks after a loan is originated to spend the PPP funds, instead of the 8 weeks currently required.
- The 75% payroll spend requirement will be reduced to 60%, which means up to 40% of PPP funds would be able to be spent on non-payroll costs (rent, utilities, and interest on mortgages for real or personal property) without affecting forgiveness.
- The FTE Reduction Penalty portion of the forgiveness calculation is being loosened if the employer can demonstrate: (a) an inability to rehire any terminated individuals; (b) an inability to locate qualified replacements; or (c) an inability to return to a level of business activity equivalent to the business’s activity level as of February 15, 2020.
- Extends the deadline to rehire workers until December 31.
The Senate returns to session next week and is expected to consider the House bill, with additional negotiations expected between Democrats and Republicans.