This week Congress passed H.R. 7010, the “Paycheck Protection Program Flexibility Act,” to provide small businesses using the PPP with additional flexibility in using their loans and applying for forgiveness. According to Big I National, the new legislation would fix some of the program’s imperfections by modifying the following key provisions in the original PPP:
- Extending the expense forgiveness period from eight weeks to 24 weeks
- This is important to the independent agent community because we are forecasting the greatest financial impact to be in Q2 and Q3 of 2020. By allowing an extension of up to 24 weeks to spend the funds and still qualify for the forgiveness period it will help many independent agencies to forgo layoffs, furloughs, pay cuts, reduced hours and benefits and allow them to plan and utilize the resources over an extended period of time.
- Reducing the 75% payroll ratio requirement to 60%
- This provision will allow agencies and small businesses to spend more of their loan on other allowable expenses and still have the loan qualify for forgiveness.
- Eliminating the two-year loan repayment restrictions for future borrowers
- Allowing payroll tax deferment for PPP recipients
- Extending the June 30 rehiring deadline until December 31, 2020
The PPP has been a widely popular program for small businesses to stay afloat and maintain staffing levels during the COVID-19 downturn. So far the PPP has awarded 4.2 million loans totaling $510 billion in funds for small businesses across the country. Over 60,000 financial and insurance service businesses have been awarded loans. As we previously reported, 93% of OIA members anticipated losing a meaningful percentage of business in 2020 and 89% intended to apply for the PPP funds in order to maintain current operations.
While this legislation still needs to be signed by President Trump before it becomes enacted, we anticipate the widely bipartisan bill to be signed into law shortly. More details are forthcoming on the PPP program, including a summary sheet on the PPP forgiveness application.