Breaking News
Senate Votes to Loosen PPP Requirements
The Senate voted to approve a bipartisan bill that will loosen restrictions on billions of dollars in forgivable business loans issued through the government’s Paycheck Protection Program or PPP.
The bill passed the Senate with unanimous consent on Wednesday. This comes after clearing the House with a 471-1 vote earlier in the week. Under the new regulations, businesses can qualify for loan forgiveness if they use their PPP loans within 24 weeks. Previous restrictions only gave business 8 weeks to use the money. The new bill also loosened restrictions in several other areas. It also extended the deadline to rehire furloughed workers until December 31.
Under the new PPP guidelines, businesses also have more options for using their money. Originally, borrowers had to use 75% of their PPP loan to cover payroll expenses in order to qualify for forgiveness. However, the new bill reduced the threshold to 60%. Legislators hope that the added flexibility will give struggling businesses a better chance of surviving the pandemic slowdown.
Waiting for Approval
Big news on the #PPP front with Senate passing bill to ease restrictions including FTE rehiring requirements.#backtobusiness #ppploans #ppploanforgiveness #pppforgiveness #smallbusinessowners #covid19resourceshttps://t.co/1rvAWe6VDk
— Stambaugh Ness (@StambaughNess) June 4, 2020
Now, the bill will go to President Trump for final approval. The president is expected to sign the bill into law. Although, White House and Small Business Administration spokespersons declined to directly comment on the legislation.
The PPP lending program launched in the early days of the US pandemic. The program also originally intended to help businesses cover payrolls while the country stays in shut down. However, lockdowns in many states stay lingering for much longer than expected. On top of this, many businesses are complaining that the PPP restrictions are hampering their ability to stay afloat. The new bill intended to address some of the most common complaints by loosening restrictions in a few key areas.
There is significant bipartisan support for modifying PPP guidelines, but some Republicans argued against the changes. Critics say that the bill deviates PPP from its original purpose of helping businesses cover payroll costs during the country's shutdown. In order to pass the legislation, Senator Ron Johnson (R-WI) insisted on adding a letter onto the record that stated that PPP loans will close to new applicants on June 30.
Supporters of the changes argued that the program needed modifications in order to become successful. When the program was first launched, no one knew that the lockdowns would drag on for so long. Under the original terms, the loans had to be used within 8 weeks. However, the 8-week deadline will expire next week for many of the program’s early applicants. Also, there are still thousands of businesses that haven’t even gotten a chance to open their doors yet.
Criticism
Senator Ben Cardin (D-MD) said the guidelines needed to be updated in order to better reflect the needs of small businesses. “When we passed these bills in March, quite frankly we thought by now, the economy would be in much better shape than it is,” Cardin said from the Senate floor on Wednesday. “We need to have a program that represents the vast majority of small businesses.”
Senate Majority Leader Mitch McConnell (R-KY) also agreed that businesses needed more flexibility with their PPP loans. “Since keeping workers on payroll obviously requires small businesses to stay afloat in the first place, we’re expanding firms’ ability to use these funds to meet obligations like their rent, their mortgage, or their utility bills,” said McConnell.
Congress has allocated roughly $660 billion to PPP lending, but the fund is almost depleted. Nearly 4.5 million businesses have already received loans totaling $510 billion. Although, the new, looser restrictions could lead to a spike in new applications. Lawmakers will probably need to provide more funding for the program in order to it going past June, which raises the question of whether another round of stimulus is on the way.
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