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U.S. House Passes Bill to Provide Greater Flexibility for PPP Borrowers; Senate to Act Next

On Thursday, May 28, 2020, the U.S. House of Representatives passed H.R. 7010, a bill that would provide businesses greater flexibility in how they spend Paycheck Protection Program (PPP) loan proceeds while still allowing those expenses to qualify for loan forgiveness. The House bill passed with a nearly unanimous, bipartisan vote of 471-1 and modifies several of the restrictions in the existing PPP.  A similar measure to amend the PPP has been introduced in the Senate, which is likely to take up the issue next week.

The House bill would amend the PPP to provide businesses the following relief:

  • Change the eligibility for loan forgiveness by reducing the portion of the loan proceeds that must be spent on payroll from 75% to 60%, which would allow up to 40% of the funds to be spent on certain qualified non-payroll items such as rent, mortgage interest, and utilities.

  • Change the eligibility for loan forgiveness by extending the time period for businesses to spend the loan proceeds from the current eight-week period to 24 weeks.

  • Increase the minimum loan term from two years to five years.

  • Permit businesses seeking loan forgiveness to defer payroll taxes without penalty.

  • Extend the rehiring safe harbor from June 30, 2020, to December 31, 2020. This would give businesses an additional six months to rehire employees or restore payroll levels without incurring any reduction in the forgiveness amount.

  • Provide exemptions in eligibility for loan forgiveness for employee unavailability when an employer is unable to rehire an employee or hire a replacement (the SBA’s interim final rule provides for a similar exemption), and for the inability to return to the same level of business due to compliance with certain COVID-19- related orders or other circumstances. 

The bill is next headed to the Senate for consideration, while the Senate is simultaneously considering its own version of the bill. The Senate version differs slightly from the version passed by the House. For example, it would extend the current eight-week period to 16 weeks, and would keep the percentage of the loan that must be spent on payroll at 75%. If the Senate’s version is passed, a conference committee may be called to resolve the differences between the House and Senate versions. Alternatively, the Senate could choose to pass an amended version of the House bill, which would then return to the House for additional votes.

©2020 Pierce Atwood LLP. All rights reserved.National Law Review, Volume X, Number 151

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Kris J. Eimicke, tax lawyer, Pierce Atwood
Partner

Kris Eimicke concentrates his practice on tax issues and economic development programs, with a special emphasis on state and federal new markets tax credit (NMTC) programs, renewable energy tax credits, historic rehabilitation tax credits, and the newly created opportunity zone program. Kris also regularly advises businesses, tax-exempt organizations, and individuals on tax issues related to a variety of business transactions, as well as representation before the Internal Revenue Service, state revenue agencies, and the courts on tax matters. 

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Elizabeth M. Frazier Government Relations Lawyer Pierce Atwood Law Firm
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Elizabeth Frazier focuses her practice on government relations, dividing her time between Pierce Atwood’s Portland and Augusta, Maine offices.

A native of Maine, Elizabeth grew up around her family’s small business, working on all aspects of business growth and management. She has an intimate understanding of the realities and requirements of running a business in Maine.

Additionally, she has worked in government and politics throughout her career. In 2008, Elizabeth worked as a grass roots coordinator for Obama for President in New Hampshire. Elizabeth then followed her passion for government to Washington, D.C. where she served as Congresswoman Chellie Pingree’s scheduler and executive assistant until 2012 when she returned home to Maine to pursue her law degree.

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Christopher E. Howard Corporate Finance Attorney Pierce Atwood Law Firm Portland Maine
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Chris Howard has a unique combination of technical legal skills and hands-on business and finance experience, enabling him to integrate these disciplines into strategies that match client objectives and provide clients with a competitive advantage. His forte is in managing complex commercial transactions and development projects in time-sensitive environments, and in accessing all sectors of the capital markets.

Chris' practice has four areas of focus:

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Andrea K. Suter Finance and Corporate Attorney Pierce Atwood Portland, ME
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Andrea Suter represents start-up, family owned, and established companies in a wide range of businesses and industries. Her practice focuses on commercial transactions and contracts, mergers and acquisitions, finance and general corporate law matters.

Prior to joining Pierce Atwood, Andrea worked at well-respected law firms in California’s Bay Area and New York where she gained extensive experience advising clients on growing and realizing value through strategic mergers and acquisitions; efficiently raising capital through private placements, venture round financing and traditional...

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