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Business Groups Ask Congress to Rethink PPP Tightening

Posted on Aug. 6, 2020

More than 100 business groups teamed up to urge Congress not to limit a second draw of Paycheck Protection Program (PPP) loans to businesses based on a 50 percent gross revenue reduction.

The August 5 letter to leaders of the Senate and its Small Business and Entrepreneurship Committee from various small business organizations said they support the inclusion of a revenue decline threshold for additional relief. However, a threshold of 50 percent from the first and second quarters of 2019 would be simply too high, according to the groups.

“Many small businesses operate with slim profit margins in a normal economy,” the letter said. “For them, even a revenue decline of 20 percent or greater could mean the difference between staying in business or closing. For their employees, such a revenue decline could mean the difference between remaining at work and receiving benefits or losing their jobs.”

The letter was in response to the Continuing Small Business Recovery and Paycheck Protection Program Act (S. 4321), which was introduced by Sens. Marco Rubio, R-Fla., and Susan M. Collins, R-Maine, in late July.

Other groups have also weighed in.

The National Restaurant Association told lawmakers in an August 3 letter that the 50 percent revenue loss threshold would hit the restaurant industry particularly hard. Applying that threshold means 55 percent of restaurants would be shut out of the second round of PPP loans. Instead, the threshold should be lowered to 20 percent, the group said.

The PPP loans were created in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), signed into law on March 27. The PPP provides businesses with loans that are forgivable on a tax-free basis as long as specific requirements are met.

The program was mired with problems from the start. Shortly after the law was enacted, it was revealed that some large companies such as Shake Shack — as well as the NBA’s privately owned Los Angeles Lakers — had received PPP loans, which many promised to return after public outcry.

Guidance has been sporadic throughout the process. Some practitioners say the latest round of loan forgiveness guidance released August 4 conflicts with earlier criteria.

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