Congress eyes changes to small business pandemic aid

Lawmakers are pushing for changes to a key program that provides aid to small businesses impacted by the coronavirus. 

Talks about “fixes”— from tweaks to an overhaul of the Paycheck Protection Program (PPP) to changes to other programs — come as Congress remains divided over a so-called phase four relief bill, which would actually be the fifth agreement reached on the coronavirus response since early March. 

Congress has already appropriated $670 billion in two tranches as part of the PPP, which was created to provide loans and grants to businesses with fewer than 500 employees. Treasury has offered a rolling stream of updated guidance but lawmakers say some changes, or even additional programs, will need to come from Capitol Hill. 

Sen. Marco Rubio (R-Fla.), who chairs the Senate Small Business and Entrepreneurship Committee, wants to extend the eight-week time frame for loan money to be spent under the PPP program and is pushing for the Senate to pass a legislative fix as soon as this week. 

“I think the more important thing to change is the time frame in which they can use it for,” Rubio told reporters. “We do need to give them more time to spend those monies.”

Rubio, in a tweet over the weekend, said that supporters of the change “are hoping to move quickly on this before the first wave of #PPPloan recipients reach the 8 week point.” Some loan recipients could hit that benchmark in early June; the Senate is expected to leave town on Thursday until June 1. 

Leadership has signaled that any changes to the program enacted through legislation would likely need to be wrapped into a larger relief bill. The House passed a bill late last week largely along party lines, while the Senate isn’t expected to pass legislation until after the Memorial Day recess. 

Democrats included some changes to the program as part of its roughly $3 trillion package, expanding eligibility to the program and adding flexibility for how the money is spent.

The House bill, for example, expands eligibility for nonprofits, allows the loans to cover an 24-week period instead of an eight-week period and eliminates a 75-25 rule that required that 75 percent of the loan went toward payroll. 

Sen. Dianne Feinstein (D-Calif.) sent the Small Business and Entrepreneurship Committee a letter urging them to include more flexibility.

“The Small Business Administration’s (SBA’s) implementation of this directive requires small businesses to use 75% of PPP funds on payroll in order to be fully forgiven, which is impossible for many small businesses, particularly those in high-cost regions that pay higher relative rent and mortgage costs,” she wrote.

Senate Republicans didn’t shut the door to changing the 75-25 requirement but warned that they wanted the program to stay focused on covering payroll and that the spending rule helped ensure that. 

“It was going to be some standard. It was going to be more than 50 percent no matter what. Because this the paycheck protection [program]. …This was designed as an alternative for unemployment and to prevent unemployment and that’s why that standard was in there,” Rubio said. 

Asked if he was supportive of changing or getting rid of the 75-25 requirement, Sen. John Thune (R-S.D.) said he would be “open” to looking at it, noting that “there have been proposals to change it” including making the breakdown 50 percent payroll and 50 percent toward payments like rent. 

“Part of the problem is that there are some industries where, you know, they have a lot of fixed cost and not so much payroll. But the whole purpose of the program was to keep people employed … so I would not want to deviate too far from that,” he said. 

Congress created the Paycheck Protection Program as part of the $2.2 trillion coronavirus package in March. The rollout of the program was beset by initial setbacks, including an overwhelmed Small Business Administration website and confusing guidance from the federal government and local banks about who was qualified for a loan and how to apply. 

Sen. Rick Scott (R-Fla.), for example, warned during the initial tranche that “millions of dollars are being wasted” amid reports that large chains had qualified. Scott specifically wanted to tighten the language on what sort of financial hardship a business would have to show to qualify. 

Sen. Cory Gardner (R-Colo.) also sent his Republican colleagues a letter earlier this month outlining several potential changes including allowing businesses that already have a loan under PPP to increase their loan amounts if they have “suffered a significant revenue loss.” 

Neither the administration nor Senate Republicans have explicitly said they think there needs to be another round of PPP funding. Treasury Secretary Steven Mnuchin said last month that he expected the second tranche would be the last, though he left the door open to more. 

Senior White House adviser Kevin Hassett on Monday said the administration was in “wait-and-see mode,” though he said PPP running out of money could spark more negotiations with Congress. 

“I think it’s possible that we’ll see a strong enough economy that we don’t need a phase four,” he said. 

Asked specifically about the PPP program, he added: “The government has lent money to businesses to stay afloat. It’s not something the government can do forever, but it is something that we can do through June, I would guess, if there’s enough cash for that.” 

According to the Small Business Administration, more than $195 billion from the $310 billion provided in the second tranche of PPP funding in April has been approved. 

Lawmakers in both parties have pitched ideas to help businesses cover payroll beyond PPP as some parts of the country begin to reopen. 

Sens. Chris Van Hollen (D-Md.), Jeff Merkley (D-Ore.) and Chris Murphy (D-Conn.) introduced legislation last week to allow businesses to share payroll costs with the federal government. Sen. Josh Hawley (R-Mo.) has also introduced legislation to have the federal government cover some payroll.

Sen. Ron Johnson (R-Wis.) said Congress should discuss “the concept of re-programming, repurposing, possibly repealing” what hasn’t been spent of the roughly $2.8 trillion already approved to combat the coronavirus.

“I think we need to think outside the box, and I think we need to think longer term. PPP was really designed for a pretty short shutdown period. It’s looking like it’s going to be lengthier now,” he said. “I think we need to recognize that reality and start factoring it in.”