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Senate Passes Paycheck Protection Program Fix

Posted on June 4, 2020

The Senate fast-tracked a bipartisan bill to amend the new small business loan program and lengthen the loan forgiveness period to 24 weeks, while eyeing further changes in the future.

The Senate passed the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010) by unanimous consent June 3 after lawmakers worked throughout the day to ease concerns raised by several Republicans.

The measure, which was passed by the House 417 to 1 on May 28, would give businesses 24 weeks instead of eight to use the loan money and still qualify for forgiveness.

The bill would also reduce the threshold for the amount of loan money required to be spent on payroll from 75 percent to 60 percent and defer payroll taxes.

Lawmakers said they wanted to add more time to the forgiveness period because they hadn’t anticipated the pandemic would last beyond the initial two months. The program could see more changes in the next coronavirus package being negotiated in Congress.

Senate Majority Leader Mitch McConnell, R-Ky., said on the floor that lawmakers from both parties identified “further technical fixes” and that he expects Congress to address those in the future.

Future Fixes Likely

Sen. Ron Johnson, R-Wis., objected to fast-tracking the measure earlier in the day, saying it has too many flaws, including potentially allowing loan approvals through December. “I just want assurances that the authorization ends June 30 and is not extended until the end of the year,” he told Tax Notes before making his formal objection. 

Johnson complained that the Paycheck Protection Program has been abused by too many companies taking out loans they don't need and that it would invite more fraud if left open until the end of the year.

Johnson said on the Senate floor that he wants a letter from each chamber’s small business committee leaders explaining that their original intent was for program money to be spent by December, but not fully reauthorizing the program through the end of the year.

“Give us a little more time to work on that method,” Johnson said, asking Senate Democrats who brought the measure to the floor for a few more hours.

That wasn’t the only problem with the bill that senators identified. Sens. Marco Rubio, R-Fla., and Susan M. Collins, R-Maine, argued that the bill would prevent companies from receiving any loan if they used less than 60 percent of their funds on payroll. But both lawmakers, who played instrumental roles in creating the small business loan program, didn't stand in the way of the bill’s passage.

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