Paycheck Protection Program Flexibility Act

Press release:

Following his continuous calls for reforms to the Paycheck Protection Program (PPP), U.S. Senate Minority Leader Charles E. Schumer today announced the unanimous Senate passage of the Paycheck Protection Program Flexibility Act.

This bipartisan bill makes critical changes to PPP, including expanding the loan forgiveness period from eight to 24 weeks, allowing small businesses greater flexibility in the use of funds for non-payroll expenses like rent and utilities. It also sets a new rehiring deadline -- by the end of the year -- to allow small businesses to receive full forgiveness of their loan.

Schumer explained that these reforms were absolutely necessary because the impact of the coronavirus crisis is long lasting and requires a program that recognizes the realities faced by small businesses that have a long road ahead to full recovery.

“These changes to the PPP program provide desperately needed flexibility and relief to countless small businesses in Upstate New York,” Senator Schumer said. “We worked day and night to pressure and persuade senators on the other side of the aisle to urgently get this done, and not wait to provide relief.

"This deal gives small businesses a more discretion and a realistic timeline to deploy the assistance they received to bring back employees and keep the lights on.”

The Paycheck Protection Program Flexibility Act is especially important for New York, Schumer explained, because New York State tends to have higher rent and utility costs compared to the rest of the country.

The senator also stressed that the bill would not solve every problem in PPP and that more must be done to promote access for rural and minority-owned businesses and nonprofits struggling to get the help they need.

Legislation like the HEROES Act, Schumer said, is still urgently needed to provide additional help not only for small businesses, but also for homeowners, renter, essential workers, medical facilities, local and state governments, and more.

The bill previously passed the House of Representatives 417-1 and following Senate passage was signed by President Trump last week.

Details on some of the main reforms in the Paycheck Protection Program Flexibility Act are provided below:

First, the Paycheck Protection Program Flexibility Act expands the loan forgiveness period from eight weeks to 24 weeks. Currently, workers may be brought back for the eight weeks, but then face a cliff after that short period and may be laid off again.

Second, the legislation removes the 25-percent restriction imposed by the Trump administration on the use of loans for fixed costs, like rent, mortgage, and utilities, and replaces it with a new 60-40 payroll to non-payroll breakdown in the use of the loan, allowing more flexibility for helping small businesses and nonprofits with all expenses to survive this crisis, which is essential to the long-term employment prospect of the workers.

Third, the proposal makes Dec. 31st the deadline to rehire workers in order to get full forgiveness on the loan, a more realistic timeline given the expected length of this public health and economic crisis.

Fourth, the proposal extends the terms of the loan from two years to at least five years for any part of the loan that is not forgiven, helping to ensure small businesses and nonprofits are not saddled with quick repayment while recovering from this crisis.