House Passes Bill Giving Small Businesses More Options In Using PPP Loan Funds
The U.S. House of Representatives passed bipartisan legislation today that would give small businesses more flexibility in how they use loans received through the Paycheck Protection Program (PPP). HR 7010, the Paycheck Protection Program Flexibility Act passed by a vote of 417 to one. The bill now heads to the Senate.
The legislation stems from complaints from small businesses that under the terms laid out in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), they are unable to take advantage of the loan program. For example, some businesses still face COVID-19-imposed safety restrictions and won’t be able to rehire employees in the timeframe originally set by the law.
“At its core, representation begins with listening,” says Rep. Dean Phillips of Minnesota, who co-authored the bill with Texas congressman Chip Roy, in a speech on the House floor. “Our small-business owners, the institutions of our Main Streets and the glue of our communities, are asking us to take actions to solve problems and engage in some good old-fashioned teamwork… This bill will help people in the ways that they need and we haven’t a moment to lose.”
Among the bill’s provisions, it will extend the expense forgiveness period from eight weeks to 24 weeks, reduce the 75-percent payroll ratio requirement, eliminate two-year loan repayment restrictions for future borrowers, allow payroll tax deferment for PPP recipients and extend the June 30 rehiring deadline.
Rep. Roy says, “For the past two months, I’ve heard from business owners in Central Texas who want to keep their employees on the payroll, continue serving their communities, and, mostly, stay afloat until they are allowed to be fully back open for business. The Paycheck Protection Program has helped many of them do just that, but I have heard from far too many business owners that the program, as it stood, needed changes to make it work for them. I didn’t want to see another local institution go out of business because Congress is more focused on politics than helping Americans who need it. Fortunately, our bipartisan bill puts Americans first and will ensure our favorite small business are around on the other side. I am thankful to my colleagues for their overwhelming support today and I look forward to its swift passage in the Senate.”
Last Thursday, the Senate failed to pass its own version of the legislation before adjourning for its Memorial Day recess. The bill it is considering is largely similar to what the House passed today and also enjoys bipartisan support, although it extends the timeframe for businesses to use PPP funds to 16 weeks instead of 24.
Treasury Secretary Steve Mnuchin has also voiced support for the PPP program update, although he has defended the program’s original limitation of spending funds on non-payroll expenses to 25 percent—the House bill expands the split from 75/25 to 60/40.