Senate Passes Changes to PPP Loan Program

On Wednesday evening, the U.S. Senate unanimously passed changes to the Paycheck Protection Program (PPP) that would allow small businesses more flexibility in using the rescue loan funds. The bill, which passed the House last week on a 417-1 vote, now heads to President Donald J. Trump’s (R) desk for his signature.

The coronavirus program provides forgivable loans to help small businesses make their payrolls during the COVID-19 crisis. The bill would extend the eight-week period – during which proceeds must be spent for loans to be forgiven – to 24 weeks or until the end of the year, whichever comes first. Businesses would also have as long as five years, instead of two, to repay any money owed on a loan.

The U.S. Small Business Administration (SBA) has reported that 4.5-million firms had received approvals for loans totaling $510.6 billion. Roughly $130 billion remains from the second round of $320 billion that Congress approved for the PPP. The initial round of $349 billion was tapped in just 13 days.

Timing is urgent because the eight-week spending period began expiring May 29 for the first loan recipients after the SBA program opened on April 3. Businesses – especially in the restaurant and hospitality industry, which are only recently getting governors’ approval to reopen – say they need more time to distribute pay.

In addition to extending the loan-forgiveness period, the bill, H.R. 7010, would instead require that 60% of a loan be used on payroll. Businesses could use a greater percentage of loaned funds on rent and other approved non-payroll expenses.

For more information on the PPP and more, visit TRSA’s Coronavirus Resource Center at www.trsa.org/covid19.