This post was updated on June 5.
By unanimous consent, the Senate on June 3 approved legislation passed by the House last week that will liberalize rules under the Paycheck Protection Program (PPP) to give business owners more time to have the loans forgiven by the U.S. government. President Trump signed the legislation into law on June 5.
Under the PPP loan program, which passed Congress earlier this spring as part of the CARES Act, small businesses with fewer than 500 employees can take out loans equal to 2.5 times their average monthly payroll from 2019 with the total capped at $10 million. For many businesses that meet key conditions on the use of these funds, the loans may be forgiven.
The legislation approved by the House and Senate, called the Paycheck Protection Program Flexibility Act, will make it easier for small businesses to utilize funds under the PPP and still qualify for loan forgiveness.
Specifically, the bill will:
- Increase the timeline for businesses to spend their loan money on payroll in order for it to be forgiven from the current eight-week deadline to 24 weeks;
- Extend the June 30 rehiring deadline for laid-off employees to Dec. 31;
- Reduce the requirement that 75% of loan money must be spent on payroll in order for the loan to be forgiven to 60%; and
- Provide more leeway on loan forgiveness for employers if they show they were unable to rehire employees or reopen to business in a way that complies with safety standards.
Prior to Senate passage of the legislation, NAHB sent a letter to the Senate leadership in support of the bill and urged lawmakers to ensure the PPP guidelines align with congressional intent to allow more workers in the residential construction sector to access the loan program. Specifically, NAHB is urging Congress to provide a waiver from eligibility restrictions in the existing Small Business Administration 7(a) loan program to allow single-family and multifamily home builders, land developers, multifamily property owners and 501(c)(6) organizations access to the PPP.