Business owners in the US to benefit from improved PPP reform bill

image source

Business owners in the US will benefit from the newly improved PPP reform bill or the Paycheck Protection Program Flexibility Act of 2020.

Business owners who were granted loan through the PPP will enjoy more freedom on how they can use the financial assistance.


The Senate passed legislation on Wednesday night. The modification of the bill expands the ways entrepreneurs can use the loans they received. The objective of the federal relief program is to aid small businesses affected by the coronavirus pandemic.

Business owners have called on Congress to improve the PPP as meeting its terms was deemed challenging. Many businesses have not fully recovered yet and fear they may take on debt.

With this, the only thing the bill needs now is President Donald Trump signature.


The bill also covers concerns around loan forgiveness, one of the highlights of the Paycheck Protection Program.

“We urge the President to sign the bill into law swiftly and deliver this much-needed flexibility for small-business owners,” said Kevin Kuhlman, vice president of government relations at the National Federation of Independent Business.

New conditions

PPP loans can become a federal grant if business owners satisfy the requirements.


The existing guidelines require business owners to spend their funds within eight weeks and allocate 75% of funding in payroll costs to ensure that their loan is fully forgiven.

According to the new legislation, the deadline now extends to 24 weeks from eight weeks. The bill also slashes the share of funding that must be given toward payroll costs to 60%. Moreover, the June 30 deadline to rehire laid-off workers has been pushed back.

The Small Business Administration, which leads the lending program, had secured 4.5 million PPP loans worth $510.6 billion as of Wednesday evening. Meanwhile, over $120 billion in funding remains accesible.

The legislation comes as borrowers may exhaust their funding by the end of June.

The current eight-week spending period will halt for 30% of borrowers by June 14, based on a NFIB survey. Another 36% will do the same in the second half of the month.


Meanwhile, some businesses may not be able to resume their operations by the time their fund runs out because of state or city orders. This makes others ponder how they will continue to support operations after PPP funds have been consumed. They may just reopen partially due to social-distancing concerns.

“People thought two months was probably going to be enough to get it done,” said Paul Becht, CPA, a partner at accounting firm Margolin, Winer & Evens. “It turned out, it’s not.”

The self-employed, businesses with few employees, and those in metropolitan areas paying rent may find it hard to devote 75% of loan funding toward payroll costs.

The PPP Flexibility Act aims to give them more leeway, so 40% of the loan could be spent on non-payroll expenses.

The President expressed support for the new bill during a White House event on Monday, facing restaurant executives who asked for changes on the Paycheck Protection Program.

“We’re not asking for more money,” said Tim Love, a celebrity chef with restaurants in Texas and Tennessee, during the meeting. “We’re just asking for the opportunity to spend it the way it was intended.”