b'LEGISLATIVEREPORTCongress Enacts Important By Ed Welch,Changes to Paycheck PVA Legislative Director Protection ProgramC ongress has approved legislation to make neededChanges contained in the new legislation will apply to changes to the federal Paycheck Protection Programthose who have already received PPP awards, as well as to (PPP). The intent is to make PPP more flexible fornew recipients.recipients.Key features of the legislation liberalize how PPP loans On May 28, 2020, by an overwhelming bipartisan vote,can be forgiven (in essence, converted from a loan to a grant) the U.S. House of Representatives approved H.R. 7010, theand also extend the amount of time in which a recipient can Paycheck Protection Program Flexibility Act of 2020. Theuse PPP funds. These provisions include: Senate approved the bill by unanimous consent yesterday,For a loan to be completely forgiven, the previous 75-25 on June 3. The President signed the legislation on June 5. percent rule will be relaxed. Now, only 60 percent of the PPP proceeds will have to be devoted to payroll costs. Non-payroll expenses (rent, mortgage payments, and/or utilities) can now account for 40 percent of PPP expendi-tures and still have the loan forgiven.The purpose of PPP was to induce employers to retain or bring back furloughed workers, and loan forgiveness depended on this being achieved. Now, however, loan forgiveness will not be reduced if an employer can dem-onstrate an inability to rehire a previous employee or an inability to hire a similarly qualified employee before December 31. In the alternative, full loan forgiveness can occur if the business can certify that it has been unable to return to the same level of business activity that existed prior to last February 15 due to new standards for sani-tation, social distancing, or other safety considerations.A PPP recipient will be able to use the funds over a 24-week period (as opposed to an eight-week require-ment in the original law). There will no longer be any restriction on a PPP awardee being able to take full advantage of the payroll tax deferment. Pursuant to the previously-enacted CARES Act, an employer can defer the deposit and payment of the employers portion of social security taxes that otherwise would be due between March 27 and December 31 of this year. The employer must deposit half of these deferred payments by the end of 2021 and the other half by the end of 2022. This ability to defer is not affected by the forgiveness of any PPP proceeds.The minimum period of a newly-issued PPP loan will five years (up to now, loans have been for two years). The new legislation does not automatically extend the loan period of previously-issued loans to five years, but it says that 30JUNE 2020FOGHORN'