House passes bill to grant flexibility for small business aid program

The House on Thursday passed bipartisan legislation to provide struggling small businesses with more flexibility while using loans provided through the Paycheck Protection Program, in the latest effort by lawmakers to help limit the economic impact of the coronavirus pandemic.

The bill passed easily by a vote of 417-1.

The legislation, authored by Reps. Dean Phillips (D-Minn.) and Chip Roy (R-Texas), expands the terms of the loans from the Paycheck Protection Program, which was created by the $2.2 trillion coronavirus relief package that Congress and the Trump administration enacted in late March.

But lawmakers say that additional changes to the program are needed following complaints from small businesses that they’re not able to take advantage of the loans under the current terms. Restaurants and hair salons, for instance, largely still face coronavirus-imposed safety restrictions and aren’t in a position to rehire all their employees in the time currently required to qualify for loan forgiveness.

The bill would give small businesses up to 24 weeks, up from the current eight weeks, to use the loans and extend the deadline for rehiring workers from June 30 to the end of this year.

It would also give small businesses the ability to spend more of the money on non-payroll costs. The current terms of the loans require recipients to use 75 percent of the funds on payroll and up to 25 percent on other costs to qualify for loan forgiveness. But the legislation would change the ratio to at least 60 percent on payroll and up to 40 percent on rent, overhead and other costs.

“As we work to get America open again, we’ve got to be mindful of the fact that times are continuing to move on, and these businesses are struggling and they can’t meet some of these restrictions and deadlines,” Roy said.

The bill now heads to the Senate, which left for its Memorial Day recess last week before taking action on its own version of legislation to make changes to the small-business loans.

The Senate version is largely similar to what the House has passed, but it only extends the time frame for small businesses to spend the funds to 16 weeks instead of 24.

“We believe what we’ve compromised on here in this chamber will be sufficient to pass the Senate. If it doesn’t, I can’t quite understand why. This is what small businesses need. And if we don’t keep the businesses open, the jobs go away,” Phillips said.

But Treasury Secretary Steven Mnuchin last week defended the decision to only allow businesses to spend 25 percent of the loans on non-payroll expenses.

“Let me just remind people it’s called the Paycheck Protection Program, it’s not called the overhead protection program,” Mnuchin said during a virtual event with The Hill. “But we want most of this money to go to workers and we believe that the 75 percent was exactly consistent with the way the program was designed.”

Another bill authored by Phillips that would require the Small Business Administration to submit a report documenting the recipients of assistance of more than $2 million from the Paycheck Protection Program was also put up for a vote on Thursday. But it failed to secure a two-thirds supermajority needed to pass under the fast-track process under which it was considered, despite securing a simple majority of 269-147.

Democrats touted it as a transparency measure, but Republicans largely opposed the measure out of concerns that publicly identifying businesses that received loans of $2 million or more would lead to “shaming.”

“I do not believe that those businesses should put on public display for potential shaming,” Rep. Steve Chabot (Ohio), the top Republican on the House Small Business Committee, said during floor debate.

Phillips acknowledged that his bill requiring the study was kept separate from the small-business loans changes because of the GOP objections.

“We are seeing evidence now of what we can get done if we do smaller bits at a time, find common ground,” Phillips said. “That doesn’t change my mandate to expose where the money’s going.”

In the meantime, discussions over another round of economic stimulus relief remain on hold with the two parties at odds over how and when Congress should act.

House Democrats passed a wide-ranging $3 trillion relief package earlier this month that would provide funding for state and local governments, coronavirus testing, rental and mortgage assistance, food stamps, another round of direct cash payments for individuals and families and an expansion of unemployment insurance.

Senate Republicans, meanwhile, are pushing for liability protections for business owners and oppose renewing the expansion of unemployment insurance that was enacted in March. The extra $600 per week in unemployment insurance is set to expire in July absent congressional action.

“I think they’ll catch the spark,” Speaker Nancy Pelosi (D-Calif.) said Thursday.

Thursday’s votes marked the second day that the House passed legislation using a form of remote voting to accommodate safety concerns about traveling to and gathering in the Capitol during the pandemic. Dozens of Democrats voted by proxy, in which they authorized colleagues present in the House chamber to vote on their behalf.

House Republicans, meanwhile, have filed a lawsuit challenging the use of proxy voting during the pandemic.