The House of Representatives on July 1 approved Senate-passed legislation to extend the deadline for small businesses affected by COVID-19 to apply for loans under the Paycheck Protection Program.
Both the House and Senate approved the legislation by unanimous consent. The legislation is now cleared for President Trump’s expected signature.
Introduced by Sen. Ben Cardin (D-MD), S. 4116 would extend the authority of the U.S. Small Business Administration (SBA) to approve PPP loans through Aug. 8, 2020. The legislation also clarifies that previously appropriated amounts authorized for other loans under section 7(a) of the Small Business Act will continue.
The urgency in approving S. 4116 was due to the SBA losing its authority to approve PPP loans as of June 30, 2020. The program, however, still has about $130 billion remaining out of the $659 billion that was authorized under the CARES Act and later expanded in subsequent legislation.
“When Congress passed the CARES Act in March, we thought that small businesses would be operational by the end of June, but it is now clear that our nation’s small businesses will still need support in the weeks and months to come,” Cardin stated upon passage of his bill.
PPP Background
Lawmakers have amended the PPP on a couple of occasions, most recently under the Paycheck Protection Program Flexibility Act (H.R. 7010) enacted June 5, which modifies provisions related to the forgiveness of loans made to small businesses under the program.
The PPP was created under the CARES Act enacted March 27 to help small businesses affected by the COVID-19 crisis by covering their near-term operating expenses and providing incentives to retain employees. PPP loans will be fully forgiven when used for certain expenses, including payroll costs, which includes employer contributions to both DC plans and DB plans.
The CARES Act originally allocated $349 billion for the program, but that funding was exhausted in less than two weeks, so lawmakers authorized an additional $320 billion ($10 billion of which was for administrative expenses) under the Paycheck Protection Program and Health Care Enhancement Act (H.R. 266) enacted April 24.
Data on the SBA website shows that 4,856,647 loans have been approved, as of June 30, totaling nearly $521 billion with an average loan size of $107,199.
What’s Next?
Both the House and Senate are planning to go on a two-week recess for the Independence Day holiday. When the lawmakers return on July 20, it is anticipated they will return to negotiations on a potential fifth bill to address the economic impact of the COVID-19 pandemic, but they will have only two weeks to act until the next scheduled break in August.
There have been broad discussions among congressional leaders and the Trump administration about what should (or shouldn’t) be included in a forthcoming bill, but no consensus. The $3 trillion HEROES Act (Health and Economic Recovery Omnibus Emergency Solutions Act) passed the House of Representatives May 15 largely along party lines, but the bill has been sidelined in the Senate.
Additional suggestions include a retooling of the PPP so that it’s more targeted to the hardest-hit businesses or to allow businesses to apply for a second round of aid, as Sen. Marco Rubio (R-FL) has urged. Other possibilities include an expansion of the employee retention tax credit.
Treasury Secretary Steve Mnuchin had testified June 10 that he believed another targeted economic stimulus bill will be needed to help small businesses and certain industries, but suggested that lawmakers shouldn’t rush into another bill before having a better idea of what changes are needed.
Additionally, Sen. Majority Leader Mitch McConnell (R-KY) stated June 30 that, “Any further recovery efforts should focus intently on three things: Kids, jobs, and health care,” further noting that additional “helpful policy would be strong legal protection for the schools, colleges, nonprofits and employers that are putting their necks on the line to reopen.”
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