A bipartisan drive to relax restrictions on emergency small business loans is hitting roadblocks in the Senate, where Republicans are at odds over the future of the aid program designed to keep employers afloat during the pandemic.
Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer want to pass a bill approved by the House in an overwhelming 417-1 vote that would give small businesses flexibility in how they use loans from the Paycheck Protection Program. The legislation has broad support among businesses because it would make it easier for borrowers to have the loans forgiven and avoid paying back the debt.
Congress made debt forgiveness a key feature of the program, as long as employers agree to maintain payroll.
McConnell said he’s hoping to address issues surrounding the program sometime this week. But a handful of lawmakers including Sens. Mike Lee (R-Utah) and Ron Johnson (R-Wis.) are resisting, standing in the way of unanimous agreement needed to pass the bill immediately without debate.
If they don’t relent, it means McConnell would have to use floor time to pass the bill — a process that could take several days — or senators would have to pass new legislation with unanimous support — which would then be sent back to House lawmakers. The House isn’t expected to return to Washington for votes until the end of the month.
“We’ve got to work through some objections that certain senators have, but I hope we can get there,” Sen. John Thune (R-S.D.) said in an interview with PBS NewsHour Tuesday.
The legislative slowdown is the latest cloud of uncertainty over the popular Paycheck Protection Program, which has approved more than $510 billion in loans despite a rocky rollout.
The concerns addressed in the House bill are urgent for many businesses that are facing a closing window in which they can use the loans and still qualify for forgiveness. The House legislation would give borrowers 24 weeks instead of eight weeks to use the funds, in a recognition that the pandemic has kept businesses sidelined longer than lawmakers expected.
The bill would also give businesses greater flexibility in where they use the money by lowering the amount they must spend on payroll to qualify for full loan forgiveness — to 60 percent instead of 75 percent.
A National Federation of Independent Business survey released this week found that the eight-week window is ending for 7 percent of small business between now and Monday. Another 23 percent say the period ends for them between Monday and June 14. Just over one-third will have to finish spending the money in the second half of June.
More than $120 billion remains available for loans under the program, and some lenders believe demand could be rekindled if the forgiveness rules are further relaxed.
But the pleas for flexibility are running into complaints by some Republicans that the House bill would keep the program alive for too long and that the aid has gone to businesses that didn’t need it.
Lee is taking aim at a provision extending the program through December. “Sen. Lee does believe that PPP was intended to be a short term solution and that loan applications should be limited to August 15,” Lee spokesperson Conn Carroll said.
Johnson has a hold on the bill because he “wants to make sure the billions being spent through actually make their way to small businesses who need the funds most,” spokesperson Ben Voelkel said. Johnson on Sunday published a Wall Street Journal op-ed in which he said “a significant number of businesses that weren’t in danger of going under also received these grants.”
“Congress also should enact reforms that will prevent future funds from flowing to organizations that don’t need them,” he wrote. “This crisis is far from over, and pressure will build to authorize even more spending. Our ability to expand federal debt is not unlimited. Any funding must be carefully distributed.”
Johnson told reporters Wednesday he’d like to see “controls over the fact that businesses that don’t need it can’t continue to receive it.” He said “we’re talking to everybody involved right now” and working to resolve the issue by Friday.
Other Republicans have raised concerns with the drafting of the House bill but aren’t blocking Senate passage. Senate Small Business Chair Marco Rubio (R-Fla.) and Sen. Susan Collins (R-Maine) say there is a serious drafting error in the House legislation that would deprive businesses of having any portion of their loan forgiven if they don’t hit the 60 percent payroll requirement.
“Current law allows proportional forgiveness of the loan,” said Collins, who added that she is not objecting to the House bill. “If a small employer cannot hire back all of his or her employees or find new ones, then the employer receives partial forgiveness for the amount used to retain or recall or otherwise pay the employees that were available. Under the House bill, however, there is a cliff: if the small business does not pay out the full 60 percent of the loan to its employees, then the small employer receives no credit at all for paying the employees that he or she was able to pay even if 59 percent of the loan went to paying workers.”
Thune told reporters Wednesday that technical problems with the House bill will “have to get fixed in some fashion” but “legislatively how we do it is still an open question.”
Thune said there were substantive, technical and “sort of philosophical” concerns with the House bill. He believes “they’re all solvable” and said “our members are kind of coming together around a solution.”
“Whether or not it takes additional action by the House remains to be seen,” he said.
Rubio told reporters he expected an effort by Senate leaders Wednesday to advance the House bill but that there might be an objection.
Separately, Rubio and Sen. Ben Cardin (D-Md.) are planning to make a new push to have the Trump administration divulge more data on where the loans are going. The Small Business Administration has yet to disclose the individual recipients of the loans, and it has yet to provide loan data sought by senators weeks ago.
At a Senate Small Business hearing Wednesday, Cardin said committee members “have heard promises that information would be made available yet we are still not getting the granular information that’s necessary for us to properly evaluate this program.”
“I will join the chairman today in a letter incorporating what we hope will be a solution to this issue,” Cardin said.
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