Important PPP Update
Thursday June 04, 2020
At 7:05 pm Eastern today, June 3, 2020, the U.S. Senate passed without objection the House drafted Paycheck Protection Program Flexibility Act endorsed by PMPA providing small businesses greater flexibility when using loans under the Paycheck Protection Program (PPP). The legislation, which passed overwhelmingly in the House on May 28 by a vote of 417-1, makes critical changes supported by the PMPA to the PPP. This is the second in a series of three bills making changes to the PPP the PMPA helped create in the CARES Act President Trump signed into law on March 27.
Following the Senate’s passage, the bill now goes to President Trump’s desk for his signature for a bill that will extend the PPP forgiveness period to 24 weeks, loan terms to five years, and safe harbor date to December 31 from June 30, among other provisions.
PMPA activated immediately to fix many parts of the PPP following surveys of our members – 47 PMPA member companies sent 144 messages to Capitol Hill calling on lawmakers to make these changes, and we succeeded. This proves when you show up, we can make a difference.
PMPA’s lobbying team in Washington, D.C., The Franklin Partnership, is working with the White House, Senate, and U.S. House of Representatives to update the PPP and provide clarity and tools to help our members during COVID-19.
The Franklin Partnership received confirmation from the top Democratic tax writer in the House that he is committed to addressing the deductibility of wages as expenses in the next legislation expected to move in July, reversing the IRS Notice to the contrary. Our PMPA members understand how critical this fix is as the IRS decision to not permit the deduction under PPP increases the tax liability for pass-through businesses, such as S Corporations, by a tax rate increase as high as 37% and for C-Corporations, an increase as much as 21%.
In addition to securing that commitment in this bill about to become law, the PMPA succeeded in its lobbying efforts to:
- Extend the PPP loan forgiveness period to include costs incurred over 24 weeks after a loan is issued or through December 31, whichever comes first;
- Extend the employer safe harbor to rehire employees to December 31, or earlier, from June 30 for a period in which loans can be forgiven if businesses restore staffing or salary levels that were previously reduced;
- Provide an additional safe harbor for employers allowing businesses to maintain forgiveness amounts for companies that were unable to rehire employees or resume business levels as of Feb. 15, or find similarly qualified workers by the end of the year;
- Change the limitation on forgiveness- another request of PMPA- requiring businesses seeking loan forgiveness to spend at least 60% of covered funds on payroll expenses rather than the 75% established by the SBA;
- Allow businesses with forgiveness loans to defer payroll taxes.
Our fight is not yet done and we continue to make things happen in Washington, due to your engagement and responses. While this is an important victory, we have much work ahead of us on expensing of wages, clarification of forgiveness terms, and other ways to make the PPP work better for our members.
We thank all PMPA members for their calls and emails to Capitol Hill, and to the team at The Franklin Partnership for their “Yeoman efforts” on our behalf.