Last Thursday, June 25, Steve Bulger, Regional Administrator for the U.S. Small Business Administration Regions II and III joined a virtual gathering hosted by the Chamber’s Middle Market Action Team to discuss with our middle market members (annual revenue $10M to $1B) the Paycheck Protection Program (PPP) Flexibility Act and revised guidelines to the PPP. Bulger recapped the key components of the Act while fielding questions from our members to better prepare our regional small to mid-size businesses for June 30, the last date on which PPP loan applications can be approved.
Paycheck Protection Program Flexibility Act (PPPFA)
Signed into law by President Trump on June 8, 2020, the PPPFA provides businesses with more time and flexibility to keep employees on payroll and continue operations as we safely reopen our country. Bulger reiterated the two key components of the Flexibility Act:
- PPPFA extends the forgiveness period from 8 weeks to 24 weeks.
“Instead of having to spend loan proceeds from PPP within the [original] eight-week period, you now have 24 weeks… We know a lot of small businesses who got these loans were under pressure to spend that money within that eight-week period in the proper manner… bottom line is, Congress heard these issues, especially from the restaurant industry in particular… so they changed it from eight weeks to 24 weeks.”
- Businesses can now spend up to 60% of PPP loan proceeds on payroll or benefits.
“Instead of having to spend 75% of [PPP loan] proceeds on payroll or benefits, you can now [spend] only 60%… You have a little more flexibility on how you spend that. That means you go from 25% to 40% to spend on rent, utilities, and interest on mortgage.”
Bulger elaborated on a few additional adjustments, including a safe harbor provision for businesses who could not hire back their employees or new employees, or for businesses struggling to meet the thresholds, to allow these businesses to remain eligible for full forgiveness of loans.