On Thursday May 28, the House of Representatives passed the Paycheck Protection Program Flexibility Act of 2020 with a bipartisan vote of 417-1. The bill, which was introduced by Dean Phillips (D-MN-3) and Chip Roy (R-TX-21), addresses many concerns that the Brewers Association and our members have with the Payroll Protection Program (PPP) loan forgiveness requirements. The legislation is intended to provide flexibility for small businesses by:
- Allowing forgiveness for expenses beyond the 8-week covered period to 24 weeks and extending the rehiring deadline;
- Increasing the current limitation on nonpayroll expenses (such as rent, utility payments, and mortgage interest) for loan forgiveness from 25 to 40 percent;
- Extending the program from June 30 to December 31;
- Extending loan terms from two to five years; and
- Ensuring full access to payroll tax deferment for businesses that take PPP loans.
The Senate is in recess until June 1. When they return to Washington, D.C. they are expected to take up similar legislation. Before breaking last week Senators Marco Rubio (R-FL) and Ben Cardin (D-MD) introduced their own legislation to address issues with the PPP. It differed from the House bill, by only extending the covered period from 8 weeks to 16 weeks and it did not address the SBA requirements that 75 percent of the loan needed to be used on payroll.
The breweries and other small businesses that received the first round PPP loans are already more than halfway through the 8-week covered period during which they are required to spend the funds to qualify for loan forgiveness. Time is of the essence and the Brewers Association encourages congress to act with haste. The changes proposed by the House bill will offer more clarity and flexibility to small and independent breweries and help ensure that they are able to qualify for PPP loan forgiveness.