Key bipartisan legislation to extend and enhance the Paycheck Protection Program, which is helping sustain businesses and pay workers during the economic devastation wrought by COVID-19, passed the House of Representatives May 28 and the Senate June 4.
Rep. Chris Smith, who supported the creation of the PPP and subsequent legislation nearly doubling its funding, said the new Paycheck Protection Program Flexibility Act, HR 7010, is needed to make the program easier, more accessible and more realistic as businesses deal with lock downs lasting into the summer.
“I grew up in a family-owned small business in Central Jersey,” Smith said. “I know these small businesses and the entrepreneurs who run them thrive on working hard, hiring neighbors and boosting our local economies. The PPP ensures they and their employees survive the pandemic and can return to work when we reopen our state and nation.
“In New Jersey, 131,000 businesses have received nearly $17 billion in forgivable loans and today’s legislation extends that lifeline for 16 more weeks, and gives our businesses greater flexibility on how to use those funds to retain workers, sustain operations and possibly adjust their commercial activities.”
HR 7010 would create more flexibility for small businesses by modifying the PPP to:
- Extends the expense forgiveness period beyond the originally stipulated 8 weeks to 24 weeks
- Reduces the requirement on 75 percent-to-payroll to 60 percent
- Eliminates the two-year loan repayment deadline for all new loans
- Prohibits mutual exclusivity of PPP loans and payroll tax deferments
- Drops the June 30 rehire deadline
Smith underscored that the bill raises the ratio of an applicant’s business expense-to-employees’ salary from 25/75 percent to 40/60 percent to obtain a forgivable loan. The feedback from the business community, especially on the ratio provision, has been that these modifications are desperately needed to enable them to address their immediate financial dilemmas, he said.
“The Paycheck Protection Program Flexibility Act is a bipartisan solution to a widespread challenge: helping businesses keep and pay their workers, meet other expenses and survive to see a better day,” Smith said.
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