(The Center Square) – The U.S. Senate passed the Paycheck Protection Flexibility Act Wednesday night to make it easier for small businesses to access loans through the Paycheck Protection Plan (PPP). The bill awaits President Donald Trump’s signature.
Introduced by Republican Congressman Chip Roy of Texas and Democratic Congressman Dean Phillips of Minnesota, the bill eases restrictions for small businesses that were approved for the PPP program.
Senate Majority Leader Mitch McConnell, R-Ky., requested a unanimous consent voice vote Wednesday evening and received no objections. Just hours before, Sen. Ron Johnson, R-Wis., objected to the bill until he received assurances that changes would be made to the program later.
The House previously passed the bill by a vote of 417-1.
The PPP was part of the $2.2 trillion CARES Act, which issued mostly forgivable loans to small businesses in early April.
The first $349 billion approved for the program was depleted by mid-April, after which Congress authorized another $310 billion for the program.
After the first round of coronavirus relief money was made available, small businesses complained that it was extremely difficult to access loans through the PPP. Once they did, they complained that they didn’t receive enough funding to keep their businesses afloat or to keep employees on the payroll because of how the loans were structured. If business owners didn’t follow the loan terms, they risked the loans not being fully forgiven and incurring some debt.
Worse still, nearly 400 publicly traded companies received almost $1.3 billion in federal forgivable loans meant for small businesses. They include construction firms, tech companies and pharmaceutical corporations, according to the analytics firm FactSquared.
Several large hotel groups and restaurant chains each obtained loans over $10 million because they filed more than one application, USA Today reports.
After public outcry, only a handful of the companies, like Shake Shack and the Los Angeles Lakers, returned the money.
The new bill eases restrictions, including allowing businesses to use the loan money for 24 weeks, not eight, and expands how much of the assistance is required to be spent on payroll costs. Small businesses can now use at least 60 percent of the loan on payroll costs and 40 percent on other costs.
The restaurant industry expressed discontent over the bill, arguing it requires restaurants to rehire laid-off workers despite still being closed or restricted to limited capacity or only takeout and delivery services. Many business owners expressed concern that they would use up the loan money before being allowed to reopen, and later have to lay off employees because they weren’t generating enough revenue to pay salaries, according to The Hill.
The new bill also extends the deadline to rehire employees to align with the expiration of enhanced unemployment insurance. It also extends the time period during which the loan must be paid back from two to five years depending on how the businesses follow the loan terms.
Critics argue that the bill has a lot of problems, including still allowing businesses that don’t really need PPP to apply.
“If we’re going to potentially authorize more spending, that program needs to be reformed,” Johnson told reporters. “My main problem with what the House did – and this is what’s in dispute – it basically reauthorized the program through Dec. 31, setting up a massive new infusion into the program without the reforms I think really need to be placed so that people who don’t need it don’t keep getting it. We don’t have an unlimited checkbook.”
Small Business Committee Chairman Marco Rubio of Florida complained that the bill contains a drafting error that could eliminate loan forgiveness entirely for companies who want to use less than 60 percent of the money for payroll costs. Previously, loan forgiveness was prorated according to how well businesses were able to use the money toward 75 percent payroll costs.
The PPP assists businesses with less than 500 employees, and the average loan, according to the Small Business Administration, is $113,705.