The House on Thursday overwhelmingly approved bipartisan changes to give small businesses more time and flexibility in using emergency loans obtained through the Paycheck Protection Program meant to aid companies and workers during the pandemic.
The details: The $670 billion program provides businesses with fewer than 500 employees with low-interest loans up of to $10 million that can be forgiven if companies meet certain requirements — but business owners said the criteria for forgiveness were problematic, making the program less effective and appealing. In response, the Paycheck Protection Program Flexibility Act passed on Thursday would:
- Extend the window small businesses have to spend their funds and still qualify for loan forgiveness from eight weeks to 24 weeks;
- Reduce the percentage of forgivable loan funds required to be spent on payroll from 75% to 60%, giving business owners the ability to use more of the money they receive on overhead expenses including rent and utilities;
- Allow payroll tax deferrals to PPP loan recipients;
- Extend the application deadline from June 30 to December 31;
- Allow more time to rehire workers;
- Extend the repayment time for non-forgiven loans from two years to five years for future borrowers.
The bill, introduced by Republican Rep. Chip Roy of Texas and Democratic Rep. Dean Phillips of Minnesota, passed 417-1. Republican Rep. Thomas Massie of Kentucky cast the only “no” vote.
What’s next: The legislation now goes to the Senate, which is expected to take up the issue when it returns next week.
Senators said last week that they had made progress on their own set of PPP changes, including some changes not in the House bill. The Senate would reportedly have allowed 16 weeks, rather than 24, for spending the loan money and would have kept the 75% payroll requirement. Sen. Marco Rubio (R-FL), one of the architects of the program, has some concerns about the House version, according to The New York Times.
The new proxy voting process used by the House to pass the bill also creates some uncertainty since Republicans have filed a lawsuit arguing that legislation passed in such a manner is invalid.
The sponsors of the bill want the Senate to act quickly and avoid making this bill part of a larger coronavirus relief package that is likely still weeks away.
“I would be both surprised and disappointed if the Senate didn’t pass this immediately and get it to the president,” Phillips said, according to the Star Tribune. And Roy told CNN ahead of Wednesday’s vote: "I hope that Congress doesn't mess this up en route to some grand bargain.”