Changes to Paycheck Protection Program Give Borrowers More Flexibility, Clearer Path to Forgiveness

Home-based care providers who have received emergency relief loans as a result of the coronavirus are in luck. Some commonly criticized aspects of the Paycheck Protection Program (PPP) are on the chopping block. 

On Wednesday, the Senate unanimously voted to approve a bill to reform the program, which was created by the CARES Act and designed to help small businesses and their employees get through the COVID-19 emergency. The bill is now headed to President Donald Trump, who is expected to sign it into law.

The law would give borrowers more time and flexibility for how to use PPP money, as well as an extend loan period, among other changes. 


“The bill doesn’t include everything, but it’s a good start,” Brian Streig — CPA and tax director at Calhoun, Thomson + Matza LLP in Austin, Texas — told Forbes. “I do think this bill is good for small business owners who have taken out Paycheck Protection Program loans.”

The program set aside nearly $350 billion in loans for small to medium-sized businesses in an effort to encourage them to retain and rehire workers amid the coronavirus. Borrowers can also use some of the money for expenses such as rent, utilities and interest on mortgages.

If borrowers use the loan appropriately, they can be eligible to have it forgiven.


However, in the past, home health providers who have received PPP loans have expressed concern that they won’t be able to meet certain requirements of the program.

Broadly, home health and home care operators have used PPP money to withstand sudden admissions dips linked to COVID-19; some have also used money to finance hazard pay for front-line workers.

“Most home health agencies find the [PPP process] to be extraordinarily difficult,” S. James Boumil, a Massachusetts-based attorney that represents home health agencies, previously told Home Health Care News. “Most of these home health companies are being run by nurses and nurse aides. They’re not accountants.”

The reform bill addresses some common complaints. It allows borrowers to extend the timeframe in which they’re allowed to use the funds from an 8-week period to a 24-week one. 

Additionally, it gives them permission to spend less of the loan on wages and still be eligible for loan forgiveness. Instead of requiring 75% of the loan to go to payroll, the law would lower that requirement to 60%.

Furthermore, borrowers now have until Dec. 31 to get their staffing and wages back up to pre-pandemic levels, and the bill creates new loan forgiveness exceptions. Now, borrowers can still be eligible for loan forgiveness if they’re unable to find enough qualified employees or fully restore business to pre-pandemic levels.

For those repaying the loan, the bill extends that deadline to five years, rather than two, still at a 1% interest rate.

Finally, the law would let borrowers delay payment of their payroll taxes, which was originally prohibited under the CARES Act.