Ag Policy Blog

Details of Paycheck Protection Program Flexibility Act

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Congress has passed the Paycheck Protection Program Flexibility Act, which modifies the terms of PPP loans for businesses. Agricultural businesses have received about $7.6 billion in loans under the program to aid them through the pandemic. (DTN image from SBA home page)

In a unanimous voice vote, the Senate late Wednesday passed the Paycheck Protection Program Flexibility Act, which the House passed last week.

The bill now goes to President Donald Trump for his signature.

Agriculture has been a small slice of the Small Business Administration's Paycheck Protection Program, but farmers have received $7.6 billion in loans under the program, which accounts for about 1.5% of the spending.

Among the major improvements in the PPP:

-The bill lowers the required spending on payroll for the PPP loans from 75% to 60%. That allows 40% of the loan to be spent on other expenses such as rent, the mortgage or utilities, etc.

-The loan terms also have been extended in the bill from two years to five years while continuing a 1% interest rate.

-The bill also extend the loan spending period from eight weeks to 24 weeks, effectively extending the time needed to use the money from two months to six months. The bill also allows companies to defer payroll taxes as well.

-The early PPP provisions also required businesses to rehire workers by June 30. The legislation pushes that back to Dec. 31.

-The bill allows lenders to modify the terms of existing PPP loans to meet the new legislations language.

The American Farm Bureau Federation highlights in an analysis that some changes in the PPP could be beneficial to farmers. AFBF compared House and Senate versions of the bill, but the Senate ended up passing the House version.

On the payroll provision, AFBF's analysis shows a farmer who received a $200,000 PPP loan and spent 50% of the loan on payroll could have the loan reduced by $180,000, leaving the farmer with a loan balance of $20,000 versus a loan balance of $50,000.

The National Restaurant Association, which pressed hard for the bill, said in an email to its members, “In a bright moment amidst an awful week for this country, we are pleased to announce that Congress has finally fixed the Paycheck Protection Program.”

“The PPP has helped countless businesses, but we are an industry with a particularly uncertain path to recovery and it simply hasn’t worked for us,” Sean Kennedy, the restaurant association executive vice president of public affairs, said.

Text of the Paycheck Protection Program Flexibility Act of 2020 https://www.congress.gov/…

American Farm Bureau analysis of PPP changes: https://www.fb.org/…

DTN Political Correspondent Jerry Hagstrom contributed to this report.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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