Late yesterday, the U.S. Senate passed revised criteria for the forgiveness aspect of the federal Paycheck Protection Program (PPP). These changes began in the U.S. House of Representatives and now will go to President Trump’s desk.
The changes to the loan forgiveness aspect of the PPP serves as a welcome sight for businesses who have applied for and received a PPP loan. The bill would extend an eight-week period – when proceeds must be spent for loans to be forgiven – to 24 weeks or until the end of the year, whichever comes first. This was a chief complaint of many business owners as the original eight-week period was tough to comply with in addition to following the guidance from local and state governments as it relates to business closures.
Businesses would also have as long as five years, instead of two, to repay any money owed on a loan, and they could use a greater percentage of proceeds on rent and other approved non-payroll expenses. In the original language, the borrower would have to utilize the PPP loan on a 75% basis for payroll and 25% for all other qualifying costs. This change moves that percentage ratio to 60%/40% allowing for more flexibility for business owners.
As we have stated many times previously, tens of thousands of Ohio businesses have utilized the PPP as they attempt to remain open or reopen due to the Coronavirus pandemic. These loans have truly served as a lifeline for many Ohio businesses, and the changes approved by Congress yesterday will provide more flexibility for PPP recipients, and we look forward to President Trump signing this into law soon.