The Payroll Protection Program has been a lifesaver for many small businesses in Michigan, but then, as the clock was ticking, and the pandemic wore on, many became fearful that what they had hoped would be converted to a grant — as planned — would convert to a loan due to time running out on them. Fortunately, the federal government has essentially said, “we’ve got your back.”
Michigan’s U.S. Senators Debbie Stabenow and Gary Peters have announced Senate passage of H.R. 7010, the Paycheck Protection Flexibility Act, which will give small businesses in Michigan more time and flexibility to use the forgivable loans they have received due to the coronavirus crisis. Stabenow and Peters are co-authors of the bipartisan Senate companion legislation, which was introduced last month.
The Paycheck Protection Program (PPP) provides forgivable loans to small businesses and non-profits with fewer than 500 employees and self-employed workers. Under the current program, 75-percent of the money must go to payroll and only gives businesses 8 weeks to use the money. This bill will allow small businesses to use more of the money on rent and other expenses in addition to lengthening the time businesses have to use their funding from 8 to 24 weeks. The bill passed the House on May 28 and now, thanks to Senate approval, heads to the President’s desk to be signed.
Senator Stabenow says, “Our small businesses—from our restaurants to our retailers—have been hit especially hard during the COVID-19 crisis. This bipartisan bill will improve the Paycheck Protection Program, so they can keep their workers on the payroll and their lights on during this pandemic. The President should sign this bill immediately.”
Senator Peters concurs, noting, “While the Paycheck Protection Program has provided critical support for Michigan’s small businesses, it was clear that the program needed fixing to ensure that it worked for those who needed help the most,” adding, “I’m glad the Senate was able to come together and unanimously pass important improvements to the Paycheck Protection Program. This was an important step, and I’m going to continue working to ensure that Michigan’s small businesses have the resources they need to get through this pandemic.”
The Paycheck Protection Program Flexibility Act will:
- Extend the period used to determine loan forgiveness from 8 weeks to 24 weeks, or December 21, 2020, whichever comes first. This will give small businesses needed flexibility to use their money.
- Allow businesses to use more of their money on non-payroll expenses. The bill will lower the Small Business Administration’s 75-percent rule to 60-percent, allowing up to 40-percent of PPP funds to go to non-payroll expenses, instead of 25-percent.
- Eliminate restrictions in new loans that limit the loan terms to 2 years. It will take many businesses more than two years to recover from this crisis and be able to pay back the loan.
- Ensure full access to payroll tax deferment for businesses that take PPP loans. Some businesses might need access to both payroll tax deferment and the PPP to survive.
- Add needed flexibility to PPP rehiring requirements. The deadline to rehire employees will be extended and flexibility added for businesses that can’t rehire due to federal sanitation or social distancing guidance.