July 8, 2020

Volume X, Number 190

July 07, 2020

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July 06, 2020

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House Passes Bill to Relax PPP Forgiveness Conditions

The U.S. House of Representatives passed a bill on May 28, 2020, to relax the terms and conditions for forgiveness of Paycheck Protection Program(PPP) loans, just before the eight-week covered periods for early borrowers are coming to an end. The Paycheck Protection Flexibility Act, H.R. 710, would increase the “covered period” for measuring qualifying expenses from eight to 24 weeks, change the ratio of covered payroll costs to covered non-payroll costs from 75%/25% to 60%/40%, and change the loan repayment period for the non-forgiven balance from two years to five years.

The U.S. Senate is separately considering its own bill, which seems to indicate there is consensus to elongate the covered period. However, the Senate version would change it from eight weeks to sixteen weeks, compared to the 24 weeks approved by the House.

Paycheck Protection Flexibility Act, H.R. 710

Other features of H.R. 710 include changing the outside date for restoring FTE headcount from June 30, 2020, to December 31, 2020, under the headcount reduction safe harbor exemption for loan forgiveness and providing relief on the same headcount reduction test if the borrower can demonstrate an inability to rehire employees who were employed on February 15, 2020, but terminated between February 15 and April 26, 2020; or if borrowers can document inability to return to the same level of business as it was experiencing before February 15, 2020, due to compliance with CDCHHS, or OSHA guidance requirements after March 1, 2020.

PPP Loan Forgiveness

The changes to the PPP lending terms are in response to general acknowledgment that the eight-week covered period originally enacted last March is too short, and that uncertainty of potential borrowers about qualifying for loan forgiveness was inhibiting loan application usage during the second wave of PPP funding. Approximately $135 billion in PPP funds remained available for additional lending as of May 27. There is reason for optimism that some legislative relief will be enacted promptly, but it remains to be seen how the Senate’s consideration will influence the outcome.

©2020 Norris McLaughlin P.A., All Rights ReservedNational Law Review, Volume X, Number 150


About this Author

William Brewer Commercial Real Estate Attorney Norris McLaughlin

William L. Brewer focuses his practice in the areas of commercial real estate financing, leasing, acquisitions and sales, loan restructuring and workouts, loan sales and purchases, and distressed debt transactions.

Bill represents lenders and borrowers in connection with commercial and mezzanine loans secured by real property and other assets, commercial construction financing, and workouts and foreclosures. He also advises lenders on restructuring defaulted loans and negotiating forbearance agreements, deed in lieu agreements, and modifications and amendments to loan documentation...

Douglas R. Brown Business Finance Attorney Norris McLaughlin New Jersey

Douglas R. Brown devotes his practice to business finance, mergers and acquisitions, and securities matters.

Doug has substantial experience in representing private equity investors in acquisition and divestiture of businesses and the corporate law, finance, securities, and business problems spawned by those matters. These have involved transactions with European and Asian operations, and the acquisition of troubled companies in bankruptcy and receivership cases.  He has also represented community banks in merger transactions and related regulatory matters.

His practice also includes U.S. and State securities law matters, including representing issuers in capital raising through registered public offerings of securities, private placements, and venture financing. He counsels public company clients in securities law compliance, SEC annual, quarterly and current reports, and proxy statements filed in connection with stockholder meetings, securities transfer issues, corporate governance, and stock-based employee compensation plans.

His work for banks regularly includes substantial commercial real estate finance and corporation loan finance.  He also represents businesses participating in NJEDA bond financing programs.

Doug’s practice also includes a wide range of commercial supply contracts, executive employment arrangements, partner disputes, and commercial disputes.

Areas of Practice

  • Banking & Financial Services
  • Business Law
  • Mergers & Acquisitions
  • Real Estate & Finance
  • Securities
  • Venture Tech & Emerging Growth Companies
S. Graham Simmons, III Business Law Attorney Norris McLaughlin Pennsylvania

Graham Simmons, the firm’s Pennsylvania Administrative Partner and Co-Chair of the Business Law Group, is a business and real estate lawyer.  In his practice, Graham has served both public and private sector clients on all types of M&A transactions, commercial and syndicated credit facilities, economic development projects, real estate transactions, leases, and land use and zoning matters.  Graham has represented clients across a diverse spectrum of industries, and is deeply experienced in the banking and financial services, health care, real estate development, economic development,...