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Nonprofit PPP Flexibility Act Passes House – May 28, 2020

Nonprofit PPP Flexibility Act - May 28, 2020

Nonprofit PPP Flexibility Act celebrates the U.S. House of Representatives bipartisan legislation passed today to give nonprofits more flexibility with the loans they received to keep their charities afloat. The Paycheck Protection Program (PPP) Flexibility Act of 2020 passed with a 417-1 vote and now heads to the Senate (WHERE IT IS EXPECTED TO PASS!)

“Millions of nonprofit organizations in this country are one step closer to meaningful relief,”  Rep. Dean Phillips, D-Minn., and Chip Roy, R-Texas tweeted after the near-unanimous vote. “This is what’s possible when leaders listen, act and collaborate.”

The legislation extends the time to use the loan from eight weeks to 24 weeks and gives businesses more time to pay back loans beyond the initial two-year term. The bill eliminates the cumbersome 75/25 restrictions that said nonprofits must spend 75 percent of their loans on payroll and only 25 percent on other operating expenses like rent and utilities. The formula changes to 60/40 percent.

The changes also allow charities to receive payroll tax deferments even if they use the PPP loan program and gives them a break from the requirement that it must rehire its employees by June 30, 2020, in order to receive loan forgiveness.

Nonprofit PPP Flexibility Act

Here’s your INSIDE CHARITY summary:

  • The bill would extend the forgiveness period for PPP loans from eight to 24 weeks.
  • It would also reduce payroll spending requirements from 75% of loan funds to 60% of loan funds, giving businesses more flexibility in deciding how to allocate the emergency funds, and extend a June 30 deadline to hire workers back.
  • The push for the bipartisan legislation came after widespread complaints that the PPP’s original terms were too restrictive for struggling small businesses.
  • The Paycheck Protection Program Flexibility Act was introduced by Rep. Chip Roy (R-Texas) and Rep. Dean Phillips (D-Minn.).
  • It passed in the House on Thursday with a vote of 471-1; only Rep. Thomas Massie (R-KY) voted no.The Senate adjourned before Memorial Day without passing a different piece of legislation that would have expanded the PPP’s terms.
  • This bill is now headed to the Senate, where it is expected to pass.
Major elements of PPP flexibility program included the $3 trillion HEROES Act the House already passed. But since that legislation is stalled in the Senate and won’t become law, lawmakers wanted to pass the small business component immediately to help out struggling charities.

“On to the Senate,” Roy tweeted after the vote. “Let’s get this done.” (The only ‘no’ vote in the House on the PPP legislation was Rep. Thomas Massie, R-Ky.)

The House failed to pass another Philips bill on Thursday, the TRUTH Act, that would have required the Small Business Administration to disclose PPP loans made over $2 million. The bill had 269 yeas and 147 nays, but failed to meet the two-thirds majority needed for passage under the suspension of the rules.

Nonprofit PPP Flexibility Act was first posted at INSIDE CHARITY

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Nonprofit PPP Flexibility Act and other INSIDE CHARITY content and comments are for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. All content on this site is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing on this site constitutes professional and/or financial advice, nor does any information on the site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto.

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