A House-approved measure to expand the benefits of a federal small business loan program and lengthen the forgiveness period to 24 weeks could run into trouble in the Senate.
In a nearly unanimous vote, the House approved the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010), 417 to 1, with Rep. Thomas Massie, R-Ky., the sole dissenting vote.
The bill’s sponsors, Reps. Chip Roy, R-Texas, and Dean Phillips, D-Minn., made some changes to their bill before the vote, including lowering the minimum threshold for payroll spending with loan funds to 60 percent from 75 percent.
In addition to giving businesses 24 weeks instead of just eight to use the loan money and still qualify for forgiveness, the bill allows recipients of loan forgiveness to still defer payroll taxes. It also creates a safe harbor for businesses to have their loans forgiven if they are unable to hire back employees because they are required to operate at lowered capacity to satisfy safety standards.
Before the vote, the Small Business Administration released data showing it has loaned $510.5 billion since the start of the program. The bill’s passage was lauded by the National Restaurant Association, which has been asking lawmakers for a more flexible approach to the Paycheck Protection Program (PPP) rules.
“While the PPP program can be a critical tool for helping restaurants and small businesses, changes to the program are needed so it can be utilized as intended,” said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association.
Rubio Sees Problems
The bill is now expected to be taken up by the Senate, which unsuccessfully tried to fast-track its own version that would double the forgiveness period to 16 weeks.
A House Democratic aide remained confident that H.R. 7010 could still be taken up by the Senate without any changes, telling Tax Notes that it may be approved by unanimous consent early next week.
But that could be made more difficult by objections from Sen. Marco Rubio, R-Fla., who chairs the Small Business and Entrepreneurship Committee and played a key role in drafting the small business loan program.
“I am concerned that inadvertent technical errors in the House’s PPP bill could create an unintended disincentive to rehiring and create new and serious burdens for PPP borrowers in terms of forgiveness,” Rubio said in a statement, without further explanation.
The Senate is expected to take up the matter when it returns to the Capitol the week of June 1. Rubio said he would continue to work with the Trump administration and lawmakers to make the necessary changes to increase flexibility without “inadvertently” harming business owners and employees.
TRUTH Act Fails
Despite their support for expanding the PPP program, Republicans are not in favor of requiring the SBA to publicly disclose details on the loan process.
The Small Business Transparency and Reporting for the Underbanked and Taxpayers at Home (TRUTH) Act (H.R. 6782), which would make that requirement, failed to get the necessary two-thirds of votes in the House on a procedural measure, falling short 269 to 147.
Rep. Steve Chabot, R-Ohio, explaining his vote against the measure, said the bill would place too heavy a burden on small businesses.