McKinley Supports Additional Help to Small Businesses

Statement

Congressman David B. McKinley, P.E. (R-W.Va.) issued the following statement after the House passed H.R. 7010, the Paycheck Protection Program Flexibility Act of 2020 Act:
"Small businesses across the country are struggling in the face of the pandemic. Thankfully Congress provided a lifeline to small businesses with forgivable loans through the Paycheck Protection Program. However, now that we have more understanding of the economic fallout of this crisis, it is important we adjust the PPP to give small businesses more flexibility to utilize it," said. Rep. McKinley. "This bill will provide business owners more flexibility in meeting the loan forgiveness requirements. Small businesses are the heart of our communities and their success is essential to our economic growth."
Background:

The Paycheck Protection Program Flexibility Act is a Congressional response to the COVID-19 pandemic.
Highlights Include:

Extends the forgiveness period to 24 weeks.
o While small businesses in many parts of the country have begun to safely reopen, some remain closed and others must abide by strict capacity limitations.

o Extending the covered period from 8 to 24 weeks accommodates businesses in many stages of reopening.

o Small businesses that prefer to stay within the original 8-week window can opt-out of the extension.

o Extends deferment window to end once the SBA makes the forgiveness payment to the lender on the borrower's behalf.

Replaces the 75/25 rule with a 60/40.
o The current rule requires that 75 percent of the loan must be used for payroll costs and 25 percent to be used for mortgage interest, rent, and utilities. Failure to adhere to this rule impacts loan forgiveness.

o Adjusting this rule gives small businesses more choice in how they use their loan funds.

All new PPP loans will receive 5-year maturity. Existing loans will remain at 2-year maturity.
o As small businesses continue to recover from the economic impact of COVID-19, extending the loan maturity gives them more time to rebuild their businesses.

Allows businesses that receive forgiveness to also receive payroll tax deferment.
Ensures small businesses won't be penalized by high unemployment benefits.
o To receive loan forgiveness, a business must rehire employees by December 31, 2020.

o Unfortunately, higher unemployment benefits have discouraged some employees from returning to work.

o Businesses that make good faith effort to rehire will satisfy headcount requirements for the purposes of forgiveness.

Creates a safe harbor for businesses that are required to open to 50 percent capacity.

Source