Covid-19 Response: New Legislation Adds Flexibility To Ppp Loan Program

The Paycheck Protection Program (PPP), created by the CARES Act to provide forgivable, low-interest loans to small businesses struggling to meet payroll and other basic costs in the wake of the COVID-19 crisis, has distributed more than $500 billion in funds. While a critical lifeline for beleaguered businesses, borrowers and industry groups have complained about the compressed time frame to use the funds and other restrictions imposed by the Small Business Administration (SBA) in implementing the program. In response, Congress adopted legislative changes on June 3, 2020 that will add flexibility to the time frames and uses of PPP funds, as well as provide revisions to tax aspects of the program. These changes will enhance borrowers' ability to maximize the benefits of the loan program, but, as with other revisions that have been necessary in the short history of the PPP program, they are likely to create new issues that will require careful review and management.