The House voted Thursday to give small businesses financially strapped by the Covid-19 crisis more flexibility to spend forgivable loans for payrolls and expenses from the government’s popular Paycheck Protection Program.
The 417-1 vote sends the measure to the Senate, which may seek changes. The bill’s sponsors say urgent action is needed because the eight-week period when proceeds must be spent for loans to be forgiven will begin expiring Friday for the first loan recipients after the Small Business Administration program opened April 3.
The House measure would give companies much more time to spend the money -- within 24 weeks or until the end of the year, whichever comes first -- and still qualify to have their PPP loans forgiven. Businesses would also have up to five years, instead of two years, to repay any money owed on a loan and could use a greater percentage of proceeds on rent and other approved non-payroll expenses.
“The true emergency period has evolved over time and this bill addresses that,” said
“This bill will help people in ways they need, and we have not a moment to lose,” Phillips said, urging colleagues to “listen to our 11 million restaurant employees.”
The measure’s Republican co-sponsor,
The single vote against the bill was cast by Kentucky Republican
The Senate is expected to take up the bill next week. While House Majority Leader
Hoyer said Tuesday the House and Senate should be able to quickly agree on changes.
But Senate Small Business Chairman
The House bill,
The measure would change documentation requirements for employers who say they’ve been unable to rehire laid-off employees. Under the program, the amount of loan forgiveness is reduced if companies don’t maintain head count and salaries. The bill also clarifies that a borrower doesn’t have to start repaying a loan until the SBA determines whether it can be forgiven.
Also, employers would be required to comply with coronavirus safety standards.
Rubio contends the House language creates a problem for companies that use less than 60% of a loan on payroll. The current PPP program allows partial loan forgiveness if a company uses less than 75% of a loan for payroll, but the House bill appears to state that none of the loan would be forgiven if the 60% threshold isn’t met.
Rubio also says the new certification on inability to rehire employees is too broad and would give businesses less incentive to rehire.
Differences over these matters could lead the Senate to amend the bill and send it back for further House action.
The PPP, the centerpiece of the $2.2 trillion relief package Congress enacted in March, allows loans of as much as $10 million that can be forgiven if a business spends it within eight weeks on payroll and no more than 25% for rent and other approved expenses.
The idea was to help businesses keep workers on the payroll while they were closed during stay-at-home orders, so they could be ready to reopen when the bans lifted. But restaurants and other small businesses have said they need more time to spend the funds because they won’t be ready to reopen or be fully functional at the end of eight weeks.
The second round of $320 billion in PPP funding began April 27 after an initial allocation of $349 billion was exhausted in just 13 days. The SBA reported on its website that more than 4.4 million loans worth $510.5 billion had been approved as of Wednesday night, meaning about $130 billion remains.
(Updates with House out of session next week in eighth paragraph)
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