Senate Majority Leader Mitch McConnell said his chamber would “soon” vote on a House bill passed last week that would add flexibility to a loan program helping small businesses survive the economic crisis caused by the novel coronavirus.
“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.
The House passed a bill last week that would make a few tweaks to the Small Business Administration’s Paycheck Protection Program, which offers companies forgivable loans that act like grants so long as the money is used mostly to pay employees.
The legislation would give small businesses more time to use the PPP funds and allow them to use more money for nonpayroll expenses.
The program, created as part of the roughly $2 trillion economic relief package passed in March, currently requires small businesses to spend the loans within eight weeks in order to have the debts forgiven. The House bill would lengthen that time to 24 weeks, reflecting the longer-than-expected duration of the coronavirus stay-at-home orders.
The legislation would also reduce an administration rule that requires borrowers to use at least 75 percent of the loans on payrolls to 60 percent. Businesses with relatively low labor costs but higher fixed costs like rent or utilities — such as restaurants or retailers — complained those restrictions were too strict to help their businesses stay afloat.
The bill, co-sponsored by Reps. Dean Phillips, D-Minn., and Chip Roy , R-Texas, would also lengthen the repayment term for parts of the loans that aren’t forgiven. PPP funds that don’t fully follow the program’s parameters must be repaid with a 1 percent annual interest within two years. The bill would extend the unforgiven loan term to five years.
FiscalNote, parent company of CQ Roll Call, has received a loan under the Paycheck Protection Program.
The House-passed bill is different from a bipartisan measure the Senate unsuccessfully tried to “hotline” on May 21 before leaving for a recess that ended Monday. That bill, backed by the bipartisan leadership of the Senate Small Business Committee, would have only lengthened the time period to use the loans from eight weeks to 16 weeks.
That Senate bill would not loosen the existing 75 percent payroll spending requirement. But it would allow businesses to spend the money on personal protective equipment and other infection-preventing investments, provisions that aren’t in the version passed by the House.
Jennifer Shutt contributed to this report.