As businesses continue to face unprecedented financial challenges due to the COVID-19 economic downturn, many of those receiving Paycheck Protection (PPP) loans hope new rules pass on how the funding can be applied.
The U.S. House on Thursday overwhelmingly backed the Paycheck Protection Program Flexibility Act of 2020, which is designed to accommodate the evolving needs of business owners while still providing PPP loan forgiveness.
The bill passed 417-1 and now goes to the Senate.
Businesses vary like fingerprints – no two exactly alike – and the range of expense pressures calls for greater flexibility, John Kabateck, California State Director with the National Federation of Independent Business (NFIB), told the Northern California Record.
“With so many small businesses on life support, we ought to allow them to dedicate their federal funding in a way that allows them to breathe more easily,” Kabateck said. “Businesses need the opportunity to use the PPP in a way that helps them, their employees, and their operation all at once.”
The PPP program has been a safety net for Main Street operators, as the pandemic has led to severe revenue losses, Kabateck said.
“Employers have a duty to spend PPP funding responsibly and effectively. While most is going to payroll because that often does take up the majority of small business cost, some may have greater expenses in rent, utilities or other services to keep their business alive and running.”
A May 21 NFIB poll found 38% of respondents reported difficulty with the loan terms requiring 75% be spent on payroll.
“Many small business owners are struggling to cover a wide range of expenses to keep their doors open, exceeding the amount they need to dedicate to payroll,” the NFIB Research Center reported.
The House legislation would lower the PPP payroll requirement from 75% to 60%, while also extending the loan forgiveness period from eight to 24 weeks.
”… I have heard from far too many business owners that the program, as it stood, needed changes to make it work for them,” U.S. Rep. Chip Roy (R-TX), the bill’s co-sponsor, said.
“I didn’t want to see another local institution go out of business because Congress is more focused on politics than helping Americans who need it,” Roy added. “I am thankful to my colleagues for their overwhelming support today, and I look forward to its swift passage in the Senate.”