On Wednesday (June 3, 2020), the United States Senate passed significant amendments to the Paycheck Protection Program (“PPP”) aimed at providing borrowers additional flexibility for using loan proceeds as they seek to recover from the effects of the COVID-19 pandemic. The bill, known as the “Paycheck Protection Program Flexibility Act of 2020” (H.R. 7010), was passed by the House of Representatives last week and now heads to the president’s desk to be signed into law. The bill’s highlights include:
The bill also provides that if a borrower does not rehire to its prior FTE level, it can still avoid a reduction in loan forgiveness proportionate to any reduction in FTEs if the borrower can establish:
Finally, the bill eliminates the prohibition on deferment of payroll taxes under CARES Act § 2302 for borrowers who receive loan forgiveness, meaning borrowers can now receive forgiveness and continue to defer 50% of their portion of the FICA tax until December 21, 2021, and the remaining 50% until December 31, 2022.
The bill is expected to be signed by President Trump before the end of the week. The bill includes no new funding for the PPP program, which, as of the latest reports, still has nearly $100 billion left for distribution.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.
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