The Senate cleared changes to the popular Paycheck Protection Program on Wednesday that will allow small businesses more flexibility in using the rescue loan funds. The bill, which passed the House last week on a 471-1 vote, now heads to President Donald Trump's desk for his signature.
Senators gave unanimous consent for the legislation hours after Sen. Ron Johnson, R-Wis., raised objections.
The coronavirus program provides forgivable loans to help small businesses make their payrolls during the COVID-19 crisis. The bill would extend an eight-week period — when proceeds must be spent for loans to be forgiven — to 24 weeks or until the end of the year, whichever comes first.
Businesses would also have as long as five years, instead of two years, to repay any money owed on a loan, and they could use a greater percentage of proceeds on rent and other approved non-payroll expenses.
Timing is urgent because the eight-week spending period began expiring last Friday for the first loan recipients after the Small Business Administration program opened April 3. Businesses — especially in the restaurant and hospitality industry, which are only recently getting the green light to reopen — say they need more time to distribute pay.
Utah Sen. Mike Lee had also objected to language he and Johnson said would lengthen the application deadline. Maine Sen. Susan Collins didn't oppose the bill but said she was concerned about the way the House drafted a provision reducing the current requirement that 75 percent of a loan be used on payroll.
Restaurants and other small businesses have said they want flexibility to spend more on overhead expenses, especially in high-rent areas. The bill, H.R. 7010, would instead require that 60 percent of a loan 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 company uses less than 75 percent of a loan for payroll, but the House bill appears to state that none of the loan would be forgiven if the 60 percent threshold isn't met.
"Instead, the employer is saddled with a debt for the entire amount, and no portion of the loan is forgiven or converted to a grant," Collins said.
Senate Small Business Chairman Marco Rubio last week sought guidance from Treasury on whether that issue can be addressed through regulation.
Treasury and the SBA did not respond to requests for comment.