The House passed Thursday’s Paycheck Protection Program revamp after Democrats scaled back an initial version of the bill to address complaints from labor leaders that it would have given businesses less incentive to hire back workers. The previous draft would have eliminated a minimum payroll spending requirement altogether under the loan forgiveness rules. Instead, House lawmakers decided to just lower the 75 percent spending requirement set by the Small Business Administration and the Treasury Department.
But the way the House drafted the compromise may have created a new set of hurdles for retooling the program.
The bill states that to receive loan forgiveness a business “shall use at least 60 percent” of the loan amount for payroll costs. The wording has created concerns that, instead of giving flexibility to businesses as intended, this measure would stop them from having any portion of their loans forgiven if they don’t hit the 60 percent requirement.
“The wording of that provision could have unintended effects. It is unclear how Treasury would interpret it,” said John Lettieri, president and CEO of the Economic Innovation Group.
Regardless of intent, drafting issues with the bill increased the likelihood that the Senate would write and pass new legislation. Rubio has identified the 60 percent language as a problem, as well as a section that would change requirements for rehiring employees, which his office argues could eliminate an employee retention mandate.
“Inadvertent technical errors in the House’s PPP bill could create an unintended disincentive to rehiring and create new and serious burdens for PPP borrowers in terms of forgiveness,” said Rubio. The program “has protected 50 million employees and has helped small business owners endure this crisis. I will continue to work with the administration and my colleagues to ensure necessary changes to increase flexibility do not inadvertently harm business owners and employees in the process.”
In addition to responding to widespread complaints that the program’s rules were too rigid, House Democrats on Thursday tried unsuccessfully to pass a bill addressing concerns that the Trump administration has released no information on the individual recipients of the aid.
Republicans blocked passage of the legislation. They were able to do so because it required a two-thirds majority to pass under rules for passing bills on an expedited basis.
The bill would have required the SBA to identify businesses that received $2 million or more in Paycheck Protection Program loans and assistance under the Economic Injury Disaster Loan Program. Republicans argued that reporting requirements in the bill would have been too burdensome for small businesses, and they didn’t want to possibly shame law-abiding borrowers that took on the larger loans.
To ensure loans are reaching businesses most in need, the SBA announced it was setting aside $10 billion of Paycheck Protection Program funding to be lent exclusively by Community Development Financial Institutions, which focus on serving underserved populations. The move followed demands by Pelosi and Schumer that the administration carve out funds for community lenders and minority banks.
“Community Development Financial Institutions are a lifeline to so many traditionally underserved and underbanked communities,” Schumer said in a statement. “I want to thank [Treasury Secretary Steven Mnuchin] for heeding our calls to set aside a pool of funding specifically designated for lending by CDFIs, and now we’re urging him to move on and include Minority Depository Institutions as well since they, too, are critical to expanding access to communities of color.”
House passes bill to ease small business emergency loan rules – POLITICO