House Passes Bill Loosening Rules on PPP Small-Business Loans--Update
May 28 2020 - 5:27PM
Dow Jones News
By Natalie Andrews and Amara Omeokwe
WASHINGTON -- The House approved a bipartisan bill that would
loosen requirements on hundreds of billions of dollars in
small-business loans, responding to concerns from employers
struggling to stay open during the coronavirus pandemic.
The House bill reduces the level of Paycheck Protection Program
funds that must be used for payroll to 60% from 75%. The bill also
gives borrowers up to 24 weeks to use the funds, up from the eight
set in the initial bill passed in March, and extends the deadline
to rehire workers to Dec. 31.
The bill passed 417-1 on Thursday, with many of the Democratic
votes read into the record by their assigned proxy, taking
advantage of a rule change this week that allows remote voting for
the first time. Republicans have rejected proxy voting and have
filed a lawsuit to block the practice.
The bill now goes to the Senate, where lawmakers of both parties
are hoping for quick action. House lawmakers say last-minute
changes to the bill, such as setting the 60% level for payroll,
were done to reach a bipartisan agreement in both chambers. That
payroll level marked a compromise between keeping it in place at
its current level and eliminating it entirely.
"This is a bill to provide immediate flexibility and it's
needed, and if the Senate sits there and messes around and then
have to wait and call it back and then weeks go by, then we're
stuck," said Rep. Chip Roy (R., Texas), a lead sponsor of the
bill.
Senators backing it plan to push for a vote next week. The PPP
changes are one area of bipartisan cooperation on Capitol Hill,
amid deep divisions over unemployment benefits, state aid,
liability shields for businesses and other issues in the next round
of talks.
"I'm hoping that the Senate can just take it up, maybe even on
unanimous consent," Sen. Angus King (I., Maine) said in an
interview. A spokesman for Senate Minority Leader Chuck Schumer
(D., N.Y.) said the senator will push for a vote next week as
well.
A spokesman for Majority Leader Mitch McConnell (R, Ky.)
declined to comment.
The Senate failed last week to reach a deal to extend the amount
of time companies have to spend loans obtained through the program
to 16 weeks. The House bill has support from several outside groups
lobbying for changes to PPP, including the National Restaurant
Association, U.S. Travel Association and the National Small
Business Association.
"We believe what we've compromised on here, in this chamber,
will be sufficient to pass the Senate," said Rep. Dean Phillips
(D., Minn.), a lead sponsor of the bill. "This is what small
businesses need, and if we don't keep the businesses open, the jobs
go away."
In a separate development, federal agencies said they would set
aside $10 billion of the remaining PPP funds for community lenders
that target underserved borrowers, as lawmakers consider broader
changes to the program.
The set-aside money will be designated for loans under the $670
billion Paycheck Protection Program that will be made through
Community Development Financial Institutions, or CDFIs, the
Treasury Department and Small Business Administration said. CDFIs
have an express mission of lending to low-income borrowers, along
with other groups that are often underserved by traditional banking
institutions.
"We have received bipartisan support for dedicating these funds
for CDFIs to ensure that traditionally underserved communities have
every opportunity to emerge from the pandemic stronger than
before," Treasury Secretary Steven Mnuchin said in a statement.
The PPP offers forgivable loans meant to help small businesses
weather the economic fallout of the coronavirus pandemic. Banks and
other lenders issue the loans, and the SBA guarantees them.
The 305 CDFIs participating in the program had issued nearly
95,000 loans worth more than $7 billion as of May 23, SBA data
show.
The move to earmark funds for CDFIs follows public backlash
aimed at the PPP after a rocky start in early April.
Many small firms initially reported being unable to access the
program, as some lenders prioritized customers with existing
relationships. Meanwhile, several large companies were able to
receive the loans, although several have since returned the money
after the Treasury Department said the program wasn't intended for
companies with adequate access to other sources of capital.
Write to Natalie Andrews at Natalie.Andrews@wsj.com and Amara
Omeokwe at amara.omeokwe@wsj.com
(END) Dow Jones Newswires
May 28, 2020 17:12 ET (21:12 GMT)
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