PPP May Become More Flexible
Early next week, the House of Representatives is expected to approve new legislation that if passed by the Senate will revise the Paycheck Protection Program (PPP), significantly benefiting small businesses.
The expected legislation will remove the requirement that 75% of the PPP funds be used on payroll and it will allow companies more time to use the funds and rehire workers. The bill has bipartisan support in the House and Speaker of the House Nancy Pelosi indicates that it should be voted upon next week.
Although the bill has not been finalized it is expected to allow employers up to 24 weeks to use the forgivable funds (as opposed to the current 8 weeks). It will also extend the rehire period safe-harbor to match the end of the supplemented unemployment benefits period. The bill will also remove the requirement that 75% of the funds be used on payroll expenses.
Additionally, this legislation would eliminate a rule that limits the loan terms to two years and would allow PPP borrowers to take advantage of the pandemic-related payroll tax deferment. The CARES Act provided a refundable payroll tax credit for 50% of employee wages for companies that were fully or partly prohibited from operating during the crisis, allowing employers to pay half their payroll taxes between March 27 and Jan. 1, with the remaining portion due by Dec. 31, 2021. This new bill will permit PPP borrowers to take advantage of the payroll tax deferral.
Although there is no guarantee that the Senate will pass this legislation, Senator Marco Rubio has indicated that the Senate may be willing to pass a narrow measure. The Senate appears to support legislation that revises the PPP to conform to the original legislative intent. The earliest the Senate can take up the vote is in early June.
The terms of the PPP continue to evolve and these proposals are likely to change the recently released PPP Forgiveness Application. The newest measures, if passed, will benefit many businesses. Kaufman & Canoles will continue to monitor the situation and will provide more information as it becomes available.
The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2026.
