The Paycheck Protection Program (PPP), was passed as part of the $2 trillion coronavirus relief package in March. PPP was meant to provide businesses low interest, long-term loans to help them through the mandate closures happening across the country.
It quickly ran out of money, so Congress approved an additional $483 billion for PPP in April. That brought the total to $670 billion.
But it has not been the secret weapon many hoped it would. First off, some large companies received money — not necessarily antithetical to the program’s intentions, as those corporations suffer similar financial setbacks during the mandated closures — which meant some small businesses would not receive financial aid.
One example, Shake Shack, returned its PPP money after public outcries. The main problem with the PPP money is there isn’t enough to cover every business forced to shut its doors or the full costs of those businesses who do receive help.
But a new piece of legislation, introduced by Congressmen Chip Roy (R-TX-21) and Dean Phillips (D-MN), aims to repair PPP where it currently suffers.
Dubbed the Paycheck Protection Flexibility Act, the bill looks to do a few things, including:
- Extend the expense forgiveness period beyond the originally stipulated eight weeks
- Remove the 75 percent-to-payroll requirement
- Eliminate 2-year loan repayment restrictions
- Prohibit mutual exclusivity of PPP loans and payroll tax deferments
- Jettison the June 30 rehire deadline
Roy said of the bill, “The Paycheck Protection Program (PPP) is providing essential capital to millions of small businesses across the country. Unfortunately, for many of these business owners, particularly local restaurants, hotels, and those in the hospitality industry, the terms are too inflexible to provide the help they need to weather the economic storm.”
“PPP cannot protect jobs if workers have no job to return to after state and local lockdowns are lifted. After listening to business owners, I will be introducing the Paycheck Protection Program Flexibility Act to provide essential flexibility to PPP loans. Time is of the essence. Many businesses are already four weeks into the loan and need this flexibility immediately before the forgiveness timeline runs out,” he continued.
While PPP has provided something, it has also come with a lot of requirements that some businesses are finding it difficult to fulfill.
For example, many businesses simply cannot make payroll take up three-fourths of their expenses. This is currently a requirement to have the loan forgiven.
Roy’s bill would allow the business itself to make the decision on what to allocate where.
In another aspect of the bill, Roy and Phillips want to see businesses able to utilize both PPP a loan and the payroll tax credit. Roy’s press release reads, “The purpose of PPP and the payroll tax deferment was to provide businesses with capital to weather the crisis. Receiving both should not be considered double-dipping. Businesses need access to both sources of cash flow to survive.”
Based on the recovery time of post-9/11 and after the 2008 financial crash, Roy and Phillips concluded it will take businesses longer than two years to recover enough to repay the loan they are receiving now.
The final provision of the bill would eliminate the employee rehire requirement date to receive loan forgiveness that currently sits at June 30. For this, Roy points to the fact that in many states, a substantial number of those unemployed are making more on unemployment insurance than they did at their old jobs.
Roy believes these fixes are necessary so that businesses, who’ve lost their revenue streams entirely by no fault of their own, can make ends meet through the pandemic.
Recently, the U.S. Treasury Department and Small Business Administration stated that businesses who took PPP loans under $2 million will not subject to audit — which will provide some stress relief for those businesses.
Texas is one of a number of states that has begun the process of reopening its economy. However, it is still nowhere near pre-pandemic status and likely won’t be for some time. Currently, for example, restaurants are allowed to reopen at 25 percent capacity, while bars are still not able to open.
Roy concluded, “I look forward to continue working with my colleagues on both sides of the aisle to enact these simple but critical reforms in order to save small businesses.”
Earlier this month, Roy launched the “Let America Open” petition effort advocating that government let businesses open their doors and Americans get back to earning a living.
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Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad watching and quoting Monty Python productions.