The next federal coronavirus aid bill will likely include a more narrowly tailored version of the Paycheck Protection Program to help businesses that continue to struggle as some parts of the country shut down for the second time.
A plan for a second round of loans to businesses that have already received loans is in the works, according to Sen. Marco Rubio, R-Fla. “It will be similar to the first one, but more targeted,” Rubio told Tax Notes. Rubio, who played a key role in the creation of the PPP, said talks with Democrats have been positive.
Congress has come under increasing pressure to continue the popular small business loan program, which is set to expire in August. Lawmakers have extended the deadline once, but businesses want the program to allow for a second loan.
A July 14 Goldman Sachs survey showed that 91 percent of businesses surveyed support another round of PPP loans, while 80 percent of recipients said they will run out of money by the first week of August.
While the first batch of PPP loans was largely meant to cover payroll expenses, a new one will likely also be used to retrofit businesses for compliance with local health guidelines, Rubio said. That would allow businesses to improve their operations while using the forgivable loan money.
The extended first round of the program still has about $130 billion available. Rubio said the available funding is a good starting point, but that he couldn’t say how much lawmakers want to add to the pool. While there is widespread agreement that another round of PPP loans should be made available, lawmakers are still negotiating on which businesses it should benefit.
Democrats do not want the loans to be made available to publicly traded companies or to be larger than $2 million, as indicated by the Prioritized Paycheck Protection Program Act (S. 4014; H.R. 7241), introduced in both chambers of Congress and endorsed by Senate Minority Leader Charles E. Schumer, D-N.Y.
The measure, introduced by Senate Finance Committee member Benjamin L. Cardin, D-Md., would only apply to self-employed individuals or businesses with 100 or fewer employees that have demonstrated a revenue loss of 50 percent or more because of the pandemic and have already used a PPP loan.
Other lawmakers want to simplify the process and make smaller loans easily forgivable. The Paycheck Protection Small Business Forgiveness Act (S. 4117), a bipartisan bill introduced by Sens. Kevin Cramer, R-N.D., and Robert Menendez, D-N.J., would allow for the forgiveness of PPP loans of $150,000 or less if the business submits a one-page attestation form from the lender.
Finance Committee member John Cornyn, R-Texas, said he hopes to include in the next bill his Small Business Expense Protection Act of 2020 (S. 3612), which would allow businesses to claim a deduction on expenses incurred while using PPP loan money. Cornyn argues that Congress intended the expenses to be deductible, while the IRS took the opposite stance with its release of Notice 2020-32, 2020-21 IRB 837.
Cornyn attempted to pass the measure by unanimous consent but received resistance from some lawmakers who agree with the IRS that it would allow businesses to double dip. “I’m optimistic we’ll get it in the next COVID-19 package,” he said.