Senate Passes PPP Flexibility Act; Pres. Trump To Sign Into Law
Wednesday, June 3, the Senate passed legislation (H.R. 7010) to provide greater flexibility for the Paycheck Protection Program (PPP), which provides help for small businesses that have been affected by the economic impacts of the Coronavirus. The Paycheck Protection Program Flexibility Act (PPFA), which passed the House last month, extends the window for businesses to use the PPP funds from 8 weeks to 24 weeks (or December 31st, whichever comes earlier). Additionally, the ratio between payroll and non-payroll expenses is modified from 75% payroll and 25% non-payroll to 60%payroll and 40% non-payroll. Employees must be rehired by December 31, 2020 to prevent impact on forgiveness. If borrower funds remain by the end of the 24-week period, PPPFA changes the maturity on these loans from two years to five years.
However, even if the PPP funds are completely spent during the 24-week period, it does not guarantee max forgiveness. The full time equivalent (FTE) calculation will still need to be done to ensure maximum forgiveness. A previous blog post from Cain Watters and Associates that provides this calculation can be found here.
Senate Majority Leader Mitch McConnell submitted a letter Wednesday evening into the Congressional Record to clarify that the authorization for the PPP loan is not extended, rather just the window for borrowers to appropriately use the funds. The deadline to apply for the PPP loan remains June 30, 2020. The application and additional information can be found here.
We appreciate all AAO members who sent messages to members of Congress over the past few weeks to ask for SBA loans. AAO members sent over 3,000 messages to members of Congress to ask for an extended 24-week period to use the funds and greater flexibility. The AAO also joined the Organized Dentistry Coalition in sending a letter to House leaders asking support for the PPP Flexibility Act prior to its passing.
We expect the Small Business Administration to produce further guidance regarding the new legislation. The AAO, along with its team of federal lobbyists, will continue to monitor coronavirus-related developments and advocate on behalf of its members.
Thank you, as always, for your membership in the American Association of Orthodontists.