Fund Your BusinessFinancePPP Flexibility Act to Assist Small Businesses Passes in the House -...

PPP Flexibility Act to Assist Small Businesses Passes in the House – Here’s What You Need to Know

On May 28, in the midst of the unrelenting COVID-19 pandemic, the House of Representatives voted 417-1 to pass a bill that offers small businesses a longer period of time to utilize their emergency loans and also ease the financial rules when it comes to payroll. The House’s bill, or the Paycheck Protection Program Flexibility Act, aligns with the Senate’s push to extend Paycheck Protection Program (PPP) money usage past the initially-set 8 weeks.

At the end of March, the PPP was enacted to offer loans and assistance to small businesses impacted by COVID-19, which includes helping them pay recurring bills and retain employees. Through the various acts and relief packages that have been passed in the past couple of months (e.g. the huge CARES Act), the PPP has gotten around $670 billion to assist nonprofit agencies and small businesses.

Now, this bill aims to tweak the current legislation and help small businesses even more. The bill comes as a win for most small businesses, who have strongly argued that they need more time to use their loans as well as need to use their loans on things other than payroll since the COVID-19 pandemic continues to plague the economy.

The extension of the loan forgiveness period will hopefully ease the urgency on small businesses seeing as the initial 8-week period was viewed as too short, unfair, and inflexible, partially because all kinds of businesses were shut down due to government orders related to COVID-19 and not by choice. Although businesses are reopening around the United States, many are still taking extreme measures to limit the exposure to COVID-19 by operating at reduced capacities or limited hours.

The House bill’s extension indicates that small businesses would have 24 weeks to utilize their PPP loans instead of 8 weeks.

Small business owners have also faced hardships with the initial payroll guidelines set at the beginning of the pandemic. The Senate and Department of Treasury seem a bit more hesitant to change these guidelines, but nevertheless, supporters state it is aimed towards allowing small businesses to spend more of their loans on things like utilities and supplies as opposed to payroll expenses. Instead of having to spend 75% of loan proceeds on payroll to qualify for funding, this bill would allow borrowers to spend 60% instead.

Proponents of the new 60% threshold say that taking this action will help small businesses recover and stay afloat during these challenging times. Others say 75% was too high because some small businesses normally use less than 75% of their monthly expenses on payroll, especially ones with very few employees. According to New York Representative Nydia Velazquez, “The new 60-40 ratio makes certain a business can remain open, weather the crisis, continue employing workers and keep serving their local communities.”

The Senate will likely consider the bill next week and, based on sources such as Senator Marco Rubio of Florida, is expected to propose the deadline be extended from 8 weeks to 16 weeks (instead of 24 like the House) and keep the 75% payroll guidelines. As always, debates will have to be held and lawmakers will need to come to an agreement. Seeing as the bill passed yesterday had overwhelming bipartisan support in the House, many are hopeful that the Senate will follow suit and agree on solid legislation to assist small businesses.


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Kimberly Hurley
Kimberly Hurley
Kimberly Hurley is a contributing writer and investigative journalist for ASBN, with over a decade of experience specializing in automotive, healthcare, and manufacturing. She enjoys working with industry professionals throughout the world to develop engaging, and accurate content.

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