House Passes Bill that Would Give Small Businesses More Time to Spend PPP Funds
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The House passed a bill on May 28 that would give small businesses more time to spend their Paycheck Protection Program (PPP) funds. The Paycheck Protection Program Flexibility Act aims to help small businesses that continue to struggle in the wake of the COVID-19 pandemic.
“While the PPP has helped millions of small businesses keep their lights on, millions more remain on the outside looking in,” said Rep. Dean Phillips (D-MN), when he announced the bill in early May. “It won’t matter how much money we appropriate if the system by which it’s distributed is inaccessible to those who need it the most.”
The PPP was passed by Congress in March as economic hardships began to surface due to the pandemic.
“The Paycheck Protection Program has emerged as one of the most visible elements of the $2 trillion Cares Act,” according to an article in The Washington Post. “As of [May 23], more than 4.4 million loans had been issued under the program, with a total valuation of more than $500 billion.”
Under the Paycheck Protection Program Flexibility Act, businesses would be given up to 24 weeks to spend funds from the program and still have the Small Business Administration (SBA) loans forgiven, according to National Retail Federation (NRF) officials.
“That’s three times the eight-week period set when the program was established to assist companies with fewer than 500 employees as part of the Coronavirus Aid, Relief and Economic Security Act,” officials said. “In addition, a requirement that 75 percent of the money be used on payroll would be reduced to 60 percent, allowing more of the money to be spent on other expenses.”
Rep. Nydia M. Velázquez (D-N.Y.), who chairs the House Small Business Committee, told The Washington Post, that small businesses still have a tough road ahead of them, and that they need flexibility in how they use the emergency capital.
“[This provision] will help ensure businesses have more room to breathe even in places where reopening the economy happens more slowly,” Velázquez said.
Retailers and business groups, such as the NRF, support the Paycheck Protection Program Flexibility Act.
“Businesses need more flexibility as they struggle with how to respond to COVID-19,” David French, senior vice president for government relations for NRF, said in a statement. “Retailers want to reopen their stores, but first they want to make sure their stores are safe for their employees and customers. Congress needs to give them the time to do that properly and let them invest government aid in the supplies, equipment and modifications needed to ensure safety.”
A separate measure sits with the Senate. Senate Small Business and Entrepreneurship Committee Chairman Marco Rubio (R-Fla.) made it clear that he does not back the House approach, The Washington Post reported.
“There are similarities between the two pieces of legislation, though, and the White House also supports making changes to the PPP, so a compromise could emerge,” The Washington Post wrote.
The Senate measure would give businesses 16 weeks to spend the money instead of 24. The measure would also allow the funds to be used on personal protective equipment (PPE), such as face masks or gloves, and on “adaptive investment,” such as expanding drive-through windows or installing sneeze guards, according to NRF officials.
A timeline of when the Senate measure would move forward had not been released at press time.