Revised Paycheck Protection Program Helps Contractors
While most would agree that the federal government has acted swiftly to institute economic relief packages in the wake of the COVID-19 pandemic, they would also agree that trying to comprehend the rules for, much less use, some of the stimulus funding has been a quagmire of confusion. Chief among those difficult programs is the Paycheck Protection Program, which was intended to keep people working even as company revenue fell across industries.
But according to an article on the Construction Dive website, many construction firms found the program so confounding and limiting in its application that they actually considered opting out and giving the money back. A study conducted by the Associated General Contractors of America (AGC) indicated that 18 percent of the AGC members that received PPP loans were thinking about returning them, the article says.
To that end, the House and Senate passed legislation recently aimed at making the rules around PPP more clear – particularly the part about loan forgiveness – and making the money easier to use.
Rather than an 8-week window for spending Paycheck Protection Program funds, businesses would have 24 weeks under the new legislation. The legislation also changes the percentage of a forgivable loan that must be used on payroll to 60 percent, down from the original 75 percent required by the initial legislation. The revised legislation would also extend the maturity timeframe of PPP loans from two years to five years and let companies using PPP loans defer payroll taxes through 2020.
AGC officials praised the revision as something that will give struggling construction businesses a chance to hang on while the construction industry works to right itself during the pandemic. The limited 8-week base period for adding staff to the payroll was a major pain point for firms looking to work through a backlog of projects, but the 24-week window remedies that to some extent. Also, changing the ratio of payroll to non-payroll uses for the money gives contractors added flexibility for the funds that may help them stay afloat during these troubled times.
The bill is headed for President Trump’s desk, though it is anticipated that he will sign it due to the wide bipartisan popularity of the revision.