U.S. Rep. Elissa Slotkin (D-Holly) lauded the passage into law of the Paycheck Protection Program Flexibility Act, which will make important changes to the Paycheck Protection Program (PPP), in line with specific concerns cited by Michigan businesses. Slotkin is a co-sponsor of the bipartisan legislation, which the President signed into law today, after it passed with near-unanimous support in the House and Senate in recent weeks.
“Small businesses: you asked for more flexibility in the Payroll Protection Program, and we heard you,” Slotkin said. “I’m proud to co-sponsor this bill, because it responds to the chorus of concerns we have heard from small businesses for weeks: they are grateful for PPP loans, but some of the requirements are hard to meet –– particularly with so many of our businesses not yet open. It’s not complicated: this PPP Flexibility Act helps entrepreneurs, workers, and our local economies obtain business transaction law services more easily. It represents important, common-sense bipartisan work on behalf of our local businesses and communities struggling during COVID-19, and I’m thrilled to see it pass into law.”
The Paycheck Protection Program Flexibility Act:
• Extends the time businesses have to use PPP funds from 8 to 24 weeks. Under the current PPP program, the loan converts to a grant as long as the business uses the money within eight weeks. Under the legislation the House passed last week, businesses would have until December 31 to use the funds. This provision responds to the single, biggest concern Slotkin heard from Michigan businesses, many of whom are not yet open for business, and therefore not able to spend the funds quickly.
• Increases the amount of the loan which can be used for non-payroll expenses from 25 percent to 40 percent. This will help businesses, especially restaurants, pay for expenses such as rent, mortgage interest, and utilities, which often make up more than 25 percent of their expenses.
• Extends the loan term from two years to five years. This is based on businesses’ average recovery time following previous crises like 9/11 and the 2008 recession.
• Prohibits mutual exclusivity of PPP loans and payroll tax deferments, so that now, businesses can take advantage of both payroll tax deferments and PPP loans.
• Includes a rehire “safe harbor” pathway for employers who try but are unable to rehire 100% of their employees, if some employees decline to come back on payroll. Those employers must provide proper documentation that they tried to rehire all employees, but were unable to, and may still qualify for loan forgiveness.