Congress Considering Extending 8-Week Requirement on PPP Loans
Among the issues with the Paycheck Protection Program (“PPP”) loans are the requirements that the loan be used in the 8 weeks following initial disbursement of the loan and that 75% of the loan must be used on payroll costs. Congress is considering changing those requirements.
A bipartisan bill was introduced in the House of Representatives by Congressman Chip Roy (R-TX-21) that would permit businesses receiving PPP loans to use the funds for 24 weeks, not just the 8 weeks in the current law. The bill would also remove the requirement that 75% of the loan be used for payroll expenses, and would extend the period for paying back portions of the loan that are not forgiven from two years to at least five years. Furthermore, the bill would hold harmless employers for any inability to bring employees back to work. A vote in the House is expected next Thursday, May 28th.
In a separate effort in the Senate, Sens. Marco Rubio (R-FL), Susan Collins (R-ME), Ben Cardin (D-MD), and Jeanne Shaheen (D-NH) put forth a proposal this week to extend the current 8-week usage time period to 16 weeks. The Senate bill would also extend the program’s existence from June 30, 2020 to December 31, 2020, although it would not provide any additional funds to the program. The proposal would allow businesses to use PPP loans to purchase personal protective equipment for their employees. The the Senate proposal is expected to will be voted on when the upper chamber returns from their recess week on June 1st. The two bills will then need to be reconciled and a final bill passed by both houses and signed by the President. These bills are separate from the HEROES Act passed last week by the House, which has seen much partisan debate.
Notice: The information contained in this update is abridged from legislation, court decisions, and administrative rulings, and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.