Yesterday (5/28/20), The House passed a bill designed to provide more flexibility on how PPP funds can be spent in order to receive forgiveness. The chamber approved the legislation in a nearly unanimous 417-1 vote. The Senate put forward a plan similar to the House bill but has not yet passed it. Senators will convene again next week.
The plan would:
- Reduce the share of PPP money small business are required to spend on payroll from 75% to 60%
- Extend the window businesses have to use the funds from two months (8 weeks) to six months (24 weeks)
- Push back a June 30 deadline to rehire workers
- Extend the time recipients have to repay the loan
- Let companies that get loan forgiveness defer payroll taxes
My thoughts: This bill (like all of the CARES Act programs) comes with the best of intentions, but is it too late for those who received first-round funding?
Most of the physicians/practice owners I know were making (up until yesterday I suppose) every effort to show that at least 75% of the money received during the previous “clock is ticking” 8 week period was either used to hire back employees that were furloughed (the point of the program) or to pay full salaries to employees who were working far less than full time (to maximize the chances of full loan forgiveness).
I suppose this is another, wait and see what happens as the rules continue to change. In this case, “early bird gets the worm” may not pan out for some, and those who were late to the PPP party may make out better in the long run.
Stay tuned. . .