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 Steve Chabot of Ohio, the top Republican on the Small Business Committee. “The flexibility that this allows America’s small businesses is going to go a long way to address the concerns we have heard time and time again.”
Senators Put Off Action on Changing Small-Business Loan Program
Bill co-sponsor Dean Phillips, a Minnesota Democrat, said restaurants and hospitality businesses are especially in need of the new flexibility because many employees haven’t been able allowed to return to work.
“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, Chip Roy of Texas, said businesses are having difficulty meeting the deadline to rehire workers in part because expanded unemployment insurance is discouraging employees from coming back to work.
The Senate is expected to take up the bill next week. House Majority Leader Steny Hoyer said Tuesday the House and Senate should be able to quickly agree on changes.
But Senate Small Business Chairman Marco Rubio, a Florida Republican, said in a statement that some provisions in the House bill “could create an unintended disincentive to rehiring and create new and serious burdens for PPP borrowers in terms of forgiveness.” He said he will work to ensure that “necessary changes to increase flexibility do not inadvertently harm business owners and employees in the process.”
Changed Provisions
The House bill, H.R. 7010, would lower to 60% the current requirement that 75% of a loan be used on payroll. Restaurants and other small businesses have said they want flexibility to spend more on overhead expenses, especially in high-rent areas.