President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA) into law on Friday to simplify the process for recipients of Paycheck Protection Program (PPP) loans to qualify for forgiveness.
"We want to thank President Trump for his leadership and commend Leader McConnell, Leader Schumer, Speaker Pelosi, and Leader McCarthy for working on a bipartisan basis to pass this legislation for small businesses participating in the Paycheck Protection Program,” said Small Business Administration (SBA) administrator Jovita Carranza.
The bill will provide businesses with more time and flexibility to keep their employees on the payroll and ensure their continued operations as we safely reopen the country. With the signing, borrowers will now have 24 weeks after the initial date of the loan. Before the new PPPFA, the spending had to occur within eight weeks of the receipt of the loan proceeds.
The law will also reduce the amount that needs to go to payroll costs to qualify for forgiveness. Under PPPFA, 60 percent of loan proceeds must be spent on payroll costs, which is down from 75 percent. The bill will also increase loan repayment from two to five years to enable grant borrowers whose loans are not forgiven more time.
SBA administrator Carranza and U.S. Treasury Secretary Steven T. Mnuchin issued a statement regarding the PPPFA on Monday. The SBA noted that the new rules will confirm that June 30, 2020, remains the last date on which a PPP loan application can be approved.
"We also want to express our gratitude to Chairman Rubio, Ranking Member Cardin, Senator Collins, Congressman Roy, Congressman Phillips, and other members of Congress who have helped to create and guide our implementation of this critical program that has provided over 4.5 million small business loans totaling more than $500 billion to ensure that approximately 50 million hardworking Americans stay connected to their jobs,” added Carranza.
About the U.S. Small Business Administration
The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations.