Small Business Loan Bill That Adds Forgiveness, Other Perks to Program Stalls in Senate

Businesses should expect some alterations to the popular Paycheck Protection Program in the coming weeks as the House and Senate consider new relief legislation.

Some of the big changes being proposed include extending the loan forgiveness window and giving businesses more flexibility on how they can use the money that is allocated to them.

The Senate tried to rush a vote on Thursday that would have doubled the time frame for businesses to spend loans and extend the deadline to apply for the benefit from June 30 to December 31. Their version of the bill also would have allowed businesses to use the funding for items other than payroll and rent, including personal protective equipment for employees and other investments needed to reopen safely.

While introducing the bill on the Senate floor, Susan Collins (R-ME) said it "builds on the success of the PPP by providing small businesses with additional flexibility so they can more effectively use these funds with state re-opening plans."

Senator Marco Rubio (R-FL), one of the architects of the paycheck program, signaled earlier that day that the bill will have near-unanimous bipartisan support but ultimately the chamber didn't take action. He told reporters that if they didn't get to a vote on Thursday the chamber would deal with the matter when they return from a brief Memorial Day recess.

"If we can't, then we'll take it up when we get back. My hope is that we'll have something in place. My guess is by the time we get back, the House will have probably passed something and sent it to us," Rubio said.

The House bill would go even further in extending the loan forgiveness deadline, jumping from eight to 24 weeks. It would also give businesses more flexibility for how they spend the money. The Trump administration currently forces businesses to spend at least 75 percent of the funds on payroll if they want the full amount of the loan to be forgiven.

Speaker Nancy Pelosi announced Wednesday that lawmakers would vote next week on the legislation. She said the issue "has an urgency about it."

Similar changes to the PPP were included in the $3 trillion HEROES Act passed by the House last week. But the Senate is not planning to take up that bill, as many Republicans slammed the legislation as a Democratic "wish list."

The Paycheck Protection Program was a key part of the $2.2 trillion relief package approved by Congress in late March. It provides business owners with 500 or fewer workers low-interest loans to stay afloat amid the economic fallout of the coronavirus pandemic.

Despite a rocky rollout, the program proved to be incredibly popular and ran out of its original $350 billion fund in a matter of days. Congress had to approve an additional $310 billion for the program last month.

Treasury Secretary Steven Mnuchin urged Congress to extend the window for borrowers to use the loans during an interview with The Hill on Thursday morning. He said he would have already made the change himself if he had the authority, that it "doesn't cost us any more money and there is bipartisan support."

But he seemed to oppose other changes, like the House's wish to give businesses more flexibility on how to use funds.

"It's called the paycheck protection program, it's not called the overhead protection program," Mnuchin said.