As some firms grapple with meeting pivotal standards for loan forgiveness amid the pandemic, President Donald Trump signed a bill into law on Friday (June 5) to provide greater spending options to those who receive government Paycheck Protection Program (PPP) loans. The president said that the law would “especially help restaurants, hotels and other businesses that have been very hard hit by the virus,” CNBC reported.
After almost full House approval last week, the Senate ratified the legislation by a voice vote Wednesday (June 3). The bill did not make it through the Senate until U.S. Sen. Ron Johnson (R-Wis.) received assurance regarding modifications in the future. Its provisions relax the requirements that small businesses have to satisfy to receive forgiveness for PPP loans.
The bill reduces the proportion of assistance that recipients have to spend on payroll from 75 percent to 60 percent, and it provides a lengthier amount of time for recipients to pay back the loans. It also lets companies utilize the funds for six months rather than two months, allows firms getting debt forgiveness to defer payroll taxes and lengthens a June 30 deadline for businesses to rehire staffers.
Initially, Congress dedicated $350 billion to the small business loan effort. But legislations added a further $310 billion into the PPP after the government provided the funds amid a disarrayed launch.
The news comes after it was reported that a minimum of $20 billion in PPP loans had been canceled.
Small Business Administration reports show $510.5 billion in the net amount of approvals on Thursday (May 28), which is approximately $2.7 billion less of that of the timeframe concluding on May 16.
Advocates for small firms forecast per news at the time that the biggest proportion of the cancellations are from companies giving back their loans because they were not sure if they could spend the money within the forgiveness period of eight weeks, uncertain about the requirements or concerned about an audit.