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Key Senate Republicans are throwing their support behind a bipartisan House bill that would give small businesses more time to use Paycheck Protection Program loans and let borrowers spend less of their loan proceeds on payroll.
The Paycheck Protection Program Flexibility Act, which passed the Democratic-run House on Thursday with near-unanimous support, makes changes to the PPP that include extending the period for using loans to 24 weeks from eight weeks. It also would let borrowers spend just 60%, rather than 75%, of their loan proceeds on paying workers and still be eligible for loan forgiveness.
The bill’s supporters have emphasized that small businesses need more flexibility in how they can use the PPP’s emergency loans. Its backers now include Senate Majority Leader Mitch McConnell, the Kentucky Republican, and Republican Sen. Marco Rubio of Florida, who chairs the Senate Committee on Small Business and Entrepreneurship.
“I hope and anticipate the Senate will soon take up and pass legislation that just passed the House by an overwhelming vote of 417-1 to further strengthen the Paycheck Protection Program so it continues working for small businesses that need our help,” McConnell said Monday in a speech on the Senate floor.
Rubio said Monday that he will support the House bill in the Senate because “it’s better than not doing anything.” But he added that “people need to know that the way the Treasury has told us they are going to interpret that bill — if you don’t spend 60% of your money on payroll, if you only spend 59.9%, you will get zero forgiveness.”
“There’s some issues with it that are going to cause people problems, and I just want everybody to know that ahead of time,” Rubio also said. “I think still we’re better off passing it than not passing it.”
Rubio and his allies tried on May 21 to pass their own bill in the Senate easing PPP terms, but the effort flopped on that day.
An earlier version of the House measure completely eliminated the 75% rule, in line with what hotels, restaurants and other industry groups have lobbied for, but labor unions objected and the bill was changed to have a 60% rule.
The PPP was established in late March to help small businesses and nonprofits hurt by the coronavirus crisis. It has received $670 billion in funding through March’s $2.2 trillion CARES Act and April’s $484 billion relief package. The program has drawn criticism over how public companies scored loans, as well as over sending money to less hard-hit areas and allegedly discriminating against businesses owned by women and minorities. There have been $510 billion in PPP loans approved as of Saturday, according to Small Business Administration figures.
U.S. stocks SPX, +0.02% DJIA, +0.40% are trading well below their February peaks after the coronavirus pandemic forced the shutdown of businesses and travel, but they have rallied from their March lows thanks in part to optimism around Washington’s aid efforts. The S&P 500 and Dow industrials were gaining Tuesday.
Jonathan Nicholson contributed to this report.
