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[Extensions of Remarks]
[Page E507]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PAYCHECK PROTECTION PROGRAM FLEXIBILITY ACT OF 2020
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speech of
HON. CHIP ROY
of texas
in the house of representatives
Thursday, May 28, 2020
Mr. ROY. Mr. Speaker, I would like to clarify the intent of some of
the language in H.R. 7010, and especially the language in the Bill as
to loan forgiveness.
Section 3 adds new paragraph 8 (Limitation on Forgiveness) that
states that:
To receive loan forgiveness under this section, an eligible
recipient shall use at least 60 percent of the covered loan
amount for payroll costs, and may use up to 40 percent of
such amount for any payment of interest on any covered
mortgage obligation (which shall not include any prepayment
of or payment of principal on a covered mortgage obligation),
any payment on any covered rent obligation, or any covered
utility payment.
The intent of this provision is to reduce the portion of the
forgivable amount that must be spent on payroll cost, to provide
employers more flexibility to bring back and retain employees in a
manner that allows compliance with state and local reopening
restrictions and the business reality of individual borrowers.
The SBA, as set forth in the ``Interim Final Rule 1'' issued on April
2, 2020, has determined that the forgivable portion of the loan (that
which is spent during the covered period) must be allocated at least 75
percent to payroll costs. In the event a borrower is unable to spend in
that ratio during the covered period, the loan is eligible for partial
forgiveness.
The IFR in section 2(o) states clearly that a PPP loan can ``be
forgiven in whole or in part.''
o. Can my PPP loan be forgiven in whole or in part?
Yes. The amount of loan forgiveness can be up to the full
amount of the full principal amount of the loan and any
accrued interest . . . The actual amount of loan forgiveness
will depend, in part, on the total amount [of payroll and
non-payroll costs] . . . over the eight-week period following
the loan . . . However, not more than 25 percent of the loan
forgiveness amount may be attributable to non-payroll
costs[.]
The overall spending of the loan is similarly limited in a 75/25
ratio. Section 2(r) states ``at least 75 percent of the PPP loan
proceeds shall be used for payroll costs.''
The intent of this Bill is to retain the existing structure set forth
by the SBA, but to amend the ratios in both IFR sections from 75/25 to
60/40 (along with extension of covered period, maturity date and other
changes) to preserve borrower flexibility and the ability to obtain
partial or proportional forgiveness of the loan if less than 60 percent
of covered period expenditures are payroll costs, provided that the
borrower must spend overall loan proceeds subject to the 60/40 ratio.
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