The U.S. Senate passed the Paycheck Protection Program (PPP) Flexibility Act on Wednesday night, June 3. The legislation now awaits the signature of President Donald Trump. It was passed in the U.S. House of Representatives last week.
Originally signed into law as the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, the PPP reform bill will restructure how entrepreneurs are allowed to use the loans issued through a new federal relief program. This program is intended to provide aid for small businesses negatively impacted by the coronavirus-caused crash of the economy.
Currently, the CARES Act requires business owners to spend their loan dollars within eight weeks, directing 75 percent to payroll costs with only 25 percent for other purposes. If a business owner fulfills these requirements, the loan then turns into a federal grant. If not, it remains a loan. However, the PPP reform bill will extend the deadline for spending to 24 weeks, allowing a ratio of 60 percent spent on payroll and 40 percent on other costs.
The lending program is overseen by the Small Business Administration, which had approved 4.5 million PPP loans worth $510.6 billion as of last night. Still, more than $120 billion in funding is available.
It is likely that President Trump will sign the legislation, as he signaled support for the PPP during a White House event earlier this week.