Legislation in House and Senate Provides PPP Flexibility

Advocacy News

May 28, 2020
By Mark Valentini, Director of Legislative Affairs

Sen. Angus King (I-ME) and Sen. Steve Daines (R-MT) introduced legislation to improve the Paycheck Protection Program (PPP) for small businesses that have taken advantage of the SBA program to help keep their companies afloat and employees on the payroll in light of the COVID-19 pandemic.

The PPP program is a $650 billion loan program for small businesses that was established within a very short timeframe and under the assumption that the economic shutdown that resulted in the wake of the pandemic would have subsided by now. However, as the pandemic continues and state governors expect to return to normal activity in several phases as opposed to more expeditious strategies, policymakers see it as necessary to modify the terms of the program in order to mitigate any negative impact resulting from the inactivity of small businesses that have taken advantage of it.

Under the Daines-King legislation, the terms of the PPP program would be modified as following:

  • The term of the loan would be extended beyond two years in order to minimize monthly payments on unforgiven portions of loan.
  • The June 30, 2020 deadline to bring payroll levels back to pre-COVID levels would be extended, and, if businesses still can’t hire back all of their employees, they would still qualify for some level of loan forgiveness.
  • The 8-week period that businesses must use their PPP funds for qualified expenses is extended to 24 weeks.
  • The 75/25 interpretation by the SBA, requiring that at least 75% of the loan go toward payroll while the remainder may be used for qualified overhead expenses, will be loosened so that more money can be used to cover lease payments or mortgage interest, utilities and other qualified expenses.
  • Businesses that have taken PPP loans also would be allowed to defer payroll taxes. Currently, a small business can either take a PPP loan or defer payroll taxes but not both.

Companion legislation in the House is expected to be voted this week. The House legislation would extend the period businesses must use PPP funds from 8 weeks to 24 weeks or until the end of calendar year 2020, whichever comes first. It would extend the term of PPP loans from two years to five years and provide more flexibility in the 75/20 rule.

If there are no further amendments to the legislation, the House and Senate are expected to reconcile the two bills, each of which enjoy broad bipartisan support.


Mark Valentini is the Director of Legislative Affairs for PHCC—National Association. A seasoned professional with more than 20 years of experience on Capitol Hill and with several national trade associations, Valentini applies his expertise in public policy, workforce and training, and insurance and tax matters to advocate on behalf of all PHCC members.

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