June 4, 2020
The Senate passed legislation the Paycheck Protection Flexibility Act (ACT) last night. This legislation extends the covered period from eight weeks to 24 weeks. This is the time PPP recipients have to spend their funds. The measure lowers to 60% from 75% the portion of PPP funds borrowers must spend on payroll costs to qualify for full loan forgiveness. That change would allow borrowers to direct more funds to costs such as rent and utilities. The ACT also allows for a payroll tax deferral for recipients and extends a two-year repayment deadline for the balance of loans that are not forgiven.
"Today we're passing another piece of legislation that makes a few targeted changes to the program," Senate Majority Leader Mitch McConnell (R-Ky.) announced from the floor. "I'm proud the Senate is sending it on to the president's desk to become law." The White House has not said whether Trump will sign the bill, but the president has indicated support for the goals of the legislation.
The passage of the bill comes hours after Democrats tried to pass it earlier Wednesday, but Senator Ron Johnson (R-Wis.) objected. Johnson said language in the bill could be misinterpreted to let businesses apply for the PPP loans through the end of the year instead of through the end of June.
Johnson asked committee leaders and Senate leadership to sign a "letter of intent" that the PPP not be automatically reauthorized through the end of the year.
"Put that letter in the Congressional Record so that we are certain that we're not reauthorizing this or authorizing it through December 31, that the authorization does end June 30," Johnson said.
The Paycheck Protection Program offers loans up to $10 million to businesses with 500 or fewer employees. Through May it had issued more than 4 million loans totaling more than $510 billion.
Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. You can contract Rich Higgins, CPA, managing principal - New Jersey Office at
Richard.Higgins@MCC-CPAs.com
and me at
Marty.McCarthy@MCC-CPAs.com
. As always, we are happy to help.
Stay safe,
Marty McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
