Earlier this year, in response to the devastating economic impacts of the coronavirus, Congress passed the CARES Act. Although many provisions of this act were beneficial to the nonprofit community—including PPP loans, tax filing extensions, and education grants—the Orthodox Union is continuing to advocate for measures that will strengthen our communities.
One measure we have supported is the “Paycheck Protection Program Flexibility Act,” H.R. 7010. This legislation was passed the House of Representatives by a vote of 417-1 on May 28 and passed the Senate by Unanimous Consent on June 3, 2020. The President is expected to sign the legislation into law in the coming days.
What the “Paycheck Protection Program Flexibility Act” Will Do:
- This legislation relaxes several restrictions on companies or organizations that borrow money through the “Paycheck Protection Program” (PPP) of the CARES Act, passed in March 2020.
- Extended Deadline to Apply for PPP: Applicants now have until December 31, 2020 (as opposed to June 30) to apply for the PPP.
- Extended Deadline to Use Funds: Loan recipients will have up to 24 weeks to spend loan funds (as compared to the current 8 weeks) or until December 31, 2020, whichever date is earlier.
- Extended Deadline to Begin Repayment of PPP Loans: This legislation will allow borrowers to defer payments on PPP loans until the SBA compensates lenders for any forgiven amounts (instead of the current six-month deferral period). Borrowers that don’t apply for forgiveness would be given at least 10 months after the program expires to start making payments.
- Extended Deadline to Repay Unforgiven Loans: Companies that use loan funds for purposes other than payroll and fixed costs will be given a five-year repayment period (rather than the two-year period set by the Administration).
- Payroll Requirement Lowered: R. 7010 will modify the existing PPP to require that a loan recipient use at least 60% of loan funds on payroll in order to be eligible for loan forgiveness (as compared to the original 75% requirement).
- Allow More Companies to Defer Payroll Tax Payments: This legislation will repeal a provision from the CARES Act that barred companies with forgiven PPP loans from deferring their payroll tax payments.
Forgiveness Amounts Maintained: H.R. 7010 will maintain forgiveness amounts for companies that document their inability to rehire workers employed as of February 15, and their inability to find similarly qualified workers by the end of the year. Under this modified measure, companies will be covered if they show that they couldn’t resume business levels from before February 15 because they were following federal requirements for sanitization or social distancing.