Legislation giving small-business owners more options in how they use Paycheck Protection Program loans was signed into law by President Donald Trump on Friday.
The bill, which passed Congress with only one “nay” vote, extends from eight weeks to 24 weeks the amount of time available for borrowers to use the coronavirus-relief loans.
The PPP Flexibility Act also extends the deadline to rehire laid-off and furloughed employees and still qualify for loan forgiveness from June 30 to Dec. 31.
The law reduces from 75% to 60% the amount of PPP money that must be spent on payroll expenses for the loan to be forgiven completely. Forty percent can be used for rent, utilities and mortgage payments.
Borrowers who don’t have their entire loan forgiven now have five years to repay with 1% interest, instead of two years.
The Senate gave final passage to the legislation on Wednesday. It came in response to small-business owners on Long Island and elsewhere saying they needed to use the PPP funds when they reopen and have more flexibility on loan forgiveness.
Trump didn't mention the PPP at the bill signing, which was held during a White House news conference. Instead, he said he wants Congress to reduce the payroll tax and provide relief to hard-hit restaurants and entertainment businesses.
At the White House, Treasury Secretary Steven Mnuchin praised the new PPP law despite it voiding regulations written by him and U.S. Small Business Administration chief Jovita Carranza. An independent watchdog said those regulations violated the intent of the CARES Act, which established the loan program in March.
Mnuchin said the PPP Flexibility Act "delivers" for restaurants and hotels who asked for "extending the PPP for 24 weeks."
Larry Kudlow, Trump's top economic adviser, said, "The PPP has distributed $510 billion and has probably saved as much as 50 million jobs" by requiring employers to rehire laid-off and furloughed workers in order to receive loan forgiveness.
More than 290,450 PPP loans totaling $37 billion were made to New York State borrowers as of May 30, according to the SBA. Data for Long Island isn't yet available.
The loans from banks and other private lenders are federally guaranteed and are for up to $10 million per applicant. Newsday has received a $10 million loan.
Changes to PPP
•24 weeks to use the funds, up from eight weeks
•60% of funds must be used for payroll to have the loan forgiven completely, down from 75%
•Dec. 31 deadline to rehire workers and use funds to qualify for loan forgiveness, extended from June 30
•Five years to repay, up from two years
SOURCE: U.S. House of Representatives
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