Senate Passes Paycheck Protection Flexibility Bill

H.R. 7010 would give more leeway to small business owners taking advantage of PPP loans.

June 04, 2020

WASHINGTON—The U.S. Senate yesterday overwhelmingly passed the Paycheck Protection Program Flexibility Act, clearing its way for President Trump’s signature. The legislation, H.R. 7010, introduced in the House by Congressmen Chip Roy and Dean Phillips, passed the House last week by a vote of 417-1.

The legislation was a response to a number of complaints about the program from small business owners who have taken advantage of the program meant to keep people at work during the pandemic. The program has largely been viewed as successful but suffered from some changing requirements and varying guidance from the U.S. Small Business Administration (SBA), which administers the program, leading to some confusion and frustration. 

H.R. 7010 makes a number of changes to the program which have been requested by small businesses. It extends the amount of time during which borrowers must use the funds from eight weeks to 24 weeks, giving them more time to get employees back on the job. It also amends a Small Business Administration (SBA) requirement that borrowers use at least 75% of the funds on payroll in order to be eligible for loan forgiveness. The new requirement lowers the bar to 60%. 

The legislation extends the program from its current expiration of June 30 through year’s end, expands the repayment period for any unforgiven amounts to five years from two years and allows businesses whose loans have been forgiven to take advantage of the deferment of payroll tax payments provided in the CARES Act. 

Senate Small Business Committee Chairman Marco Rubio had partnered with Maryland Senator Ben Cardin on a different version of similar legislation in the Senate, but after the House legislation passed with such a strong bipartisan vote they opted to attempt to move the House bill instead in order to get needed flexibility into the market as soon as possible. Businesses that were able to take advantage of the program at its inception are coming up on the end of the original eight-week period next week, adding to the urgency to pass the legislation. 

The legislation is now on the way to the president’s desk where he is expected to sign it into law.