With companies and employees still suffering across the country as a result of the coronavirus pandemic, the U.S. House of Representatives yesterday passed a new bill meant to address one of the biggest complaints about the federal loan program for small businesses—how they can spend the money. Under the bill, which passed the House almost unanimously and will head to the Senate next week, some restrictions for the Paycheck Protection Program, or PPP, would be relaxed. Here’s a breakdown of what would change:
- Spending requirements: Only 60% of the loan funds would need to be spent on payroll, compared to the current 75%.
- Loan forgiveness period: This would be extended to 24 weeks, up from eight weeks.
- Deadline to rehire workers: This would be pushed back to a yet-to-be-determined date. It’s currently June 30.
- Other perks: Forgiveness recipients would now be allowed to defer payroll taxes.
Restrictions on the PPP loans have been a significant point of contention for many small business owners, particularly those with physical storefronts who felt it made no sense to maintain payroll if their businesses weren’t allowed to operate during the pandemic. To make matters more complicated, guidance from the Small Business Administration kept changing, leaving some business owners worried that they could be accused of fraud if they spend the money the wrong way.
The new bill could make things a bit easier, although many headaches will surely remain. The legislation heads to the Senate next week, where members of both parties have indicated that they want to move swiftly to make the PPP less restrictive.