Senate passes Angus King’s small business loan overhaul
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The U.S. Senate on Wednesday authorized changes to the popular Paycheck Protection Program, which will allow small businesses more flexibility in using bailout loan funds.
Senators gave their unanimous consent for the legislation hours after a Republican senator’s objection. The bill, which passed the House last week in an almost unanimous vote, is now heading to President Donald Trump’s office for signature.
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The Paycheque Protection Program offers forgivable loans to help small businesses with their payroll during the coronavirus crisis. The bill would extend an eight-week period during which the proceeds must be spent for loans to be canceled to 24 weeks or until the end of the year, whichever comes first.
Businesses would also have up to five years, instead of two, to repay any money owed on a loan, and they could use a higher percentage of the proceeds from rent and other approved non-salary expenses.
Timing is urgent as the eight-week spending period began to expire last Friday for first-time loan recipients after the Small Business Administration program opened on April 3. say they need more time to distribute the payroll.
The House bill reflected legislation led by Sens. Angus King, I-Maine, and Steve Daines, R-Montana. In a statement, King, who speaks with Democrats, said the changes would give business owners “the flexibility they need to make the decisions that best suit their unique circumstances.”
Senator Susan Collins, R-Maine, co-wrote the program as it was originally written. She did not oppose the recast bill, but said she was concerned about how the House drafted a provision reducing the current requirement that 75 percent of a loan be used on payroll.
Restaurants and other small businesses said they wanted the flexibility to spend more on overhead, especially in high-rent areas. Instead, the bill would require 60% of a loan to be used on payroll.
The House bill creates a “cliff,” Collins said in a statement. The current PPP program allows partial loan forgiveness if a business uses less than 75% of a loan for payroll, but the House bill seems to indicate that no loans would be canceled if the threshold of 60 % was not reached.
“Instead, the employer is faced with debt for the full amount, and no part of the loan is canceled or converted into a grant,” Collins said.
About $ 130 billion remains from the $ 320 billion second round that Congress approved for the PPP. The $ 349 billion first round was mined in just 13 days.
At a Senate Small Business Committee hearing on Wednesday, there was broad support for extending the eight-week loan forgiveness period and changing the rule that 75 percent of proceeds must be spent on the wage bill.
Michael Strain, director of economic policy studies at the American Enterprise Institute, called the 75% rule implemented by the Trump administration “a mistake” because it limits the program’s ability to help companies such as those in high-rent cities that have to spend more. on expenses.
“A company that cannot pay its rent cannot continue to pay its workers, either,” Strain told the committee.
BDN writer Michael Shepherd contributed to this report.
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