Today, the United States House of Representatives passed new legislation which would make it easier for businesses to have their Paycheck Protection Program loans forgiven by relaxing restrictions on how the loan money can be used and extending the period that businesses have to use the funds.
The bill would extend the forgiveness period for PPP loans from eight to 24 weeks. It would also reduce payroll spending requirements from 75% of loan funds to 60% of loan funds, giving businesses more flexibility in deciding how to allocate the emergency funds. Finally, it would extend the deadline for hiring workers back from June 30 until later in the year.
The push for the bipartisan legislation came after widespread complaints that the PPP’s original terms were too restrictive for struggling small businesses. Companies with high fixed costs have complained the PPP’s strict spending rules undermine the program’s efforts to save them. In addition, many recipients have encountered barriers to rehiring employees within the current timeline, based in large part on current increased unemployment insurance benefits.
The bill is now headed to the Senate, where it is expected to pass.