Small business owners would have more latitude in using their Paycheck Protection Program loans if President Donald Trump signs into law a bill given final passage by the Senate on Wednesday.
The legislation, which passed the House with one “nay” vote and the Senate by unanimous consent, extends the amount of time borrowers have to use PPP funds from eight weeks to 24. It also extends the deadline to rehire laid-off and furloughed employees and still qualify for loan forgiveness from June 30 to Dec. 31.
The bill reduces from 75% to 60% the amount of PPP money that must be spent on payroll expenses for the loan to be forgiven completely. The remainder can be used for rent, utilities and mortgage payments.
The bill also gives borrowers five years to repay the loan instead of two years.
The congressional action comes after small business owners on Long Island and elsewhere said they need to use the PPP funds when they reopen and have more flexibility on loan forgiveness.
Changes to the 75% threshold and two-year term address violations of the intent of the CARES Act, which established the PPP.
Last month, the inspector general of the U.S. Small Business Administration found those requirements, established by SBA and the U.S. Department of Treasury, “could result in an unintended burden to the borrowers.”
The adopted legislation provides “desperately-needed flexibility and relief to countless small businesses on Long Island and beyond,” said Senate minority leader Charles Schumer, who successfully sought unanimous consent. “This deal gives small businesses a more realistic timeline to get the help they need while they bring back employees.”
An aide said Schumer will push for an immediate bill signing by Trump.
More than 290,450 PPP loans totaling $37 billion were made to New York State borrowers as of May 30, according to SBA. The agency hasn’t been able to provide Long Island data since PPP began on April 3.
PPP loans are for up to $10 million per applicant with an interest rate of 1%. Newsday has received a $10 million loan.
The federally guaranteed loans are made by banks and other private lenders. About $90 billion in guarantees are still available, out of $659 billion authorized by Congress. The first $349 billion in guarantees was exhausted in two weeks but demand slowed as small business owners found the regulations didn’t suit their needs.
“There is still plenty of money in the PPP appropriation, and now is the time for any small business owner, who feels that this program could help them, to contact a participating lender,” SBA’s New York regional administrator Steve Bulger said Wednesday.
Rep. Thomas Suozzi (D-Glen Cove) urged Trump to sign the bill, saying, “Our local small businesses are desperately awaiting this action.”
FIXING THE PPP
Congress has passed legislation that changes some regulations for Paycheck Protection Program loans. The changes include:
* 24 weeks to use the funds, up from eight weeks
* 60% of funds must be used for payroll to have the loan forgiven completely, down from 75%
* Dec. 31 deadline to rehire workers and use funds to qualify for loan forgiveness, extended from June 30
* Five years to repay, up from two years
SOURCE: U.S. House of Representatives