Congress eyes tighter restrictions on next round of small business help
Lawmakers are weighing tightening the qualifications for small business aid as they debate a fifth coronavirus bill.
As part of a March $2.2 trillion coronavirus relief package, Congress created the Paycheck Protection Program (PPP), which provides loans to businesses with fewer than 500 employees.
Senators in both parties say they support adding new requirements for businesses who want to apply for a second tranche of funding in the next stimulus legislation, which they are expected to start formally negotiating in late July.
“I think everyone understands that’ll have to be a part of it in the second round … So I think that’ll most definitely, in my view, be a part of it,” said Sen. Marco Rubio (R-Fla.), the chairman of the Small Business Committee, when asked about including a means-test to qualify for more PPP funds.
Sen. Susan Collins (R-Maine) added that she thought it was likely that additional restrictions would be included in a second round of PPP aid.
“It would have a revenue-loss test … and it would probably also have a lower number of employees” as a ceiling to qualify, Collins told The Hill about the next coronavirus bill.
Negotiations among a core group of senators, which includes Collins and Rubio, are already underway about what the next phase of the program should look like. Collins noted that it was their goal to have a tentative deal by the time lawmakers return to Washington on July 20.
Congress has allocated more than $670 billion to the program through the initial March bill, as well as a follow-up “interim” agreement that cleared both the House and Senate in April.
Lawmakers have already tweaked some of the PPP details, including changing the window for when businesses could use loans and still have the funds be forgiven. They also loosened an initial restriction that 75 percent of the loan had to go toward payroll and 25 percent to other expenses like rent to have it be a 60 percent-40 percent split instead.
The PPP is viewed as one of the most successful parts of the March bill, and was one of the first areas to get bipartisan sign off. But it also came under scrutiny during its rollout after large corporations disclosed that they were able to use loopholes to qualify for aid under the program.
“We have all heard the stories — stories of big businesses with thousands of employees that found loopholes to qualify for these loans, universities with massive endowments accepting these loans, and even small businesses taking these loans when they haven’t seen a downturn in their revenue,” said Sen. Rick Scott (R-Fla.).
Sen. Ron Johnson (R-Wis.) said he would support using left-over money to create a new round of the program “with the right reforms.”
“We all want to help, you know, business survive, stay open, rehire … My biggest problem with PPP was it didn’t have any backside controls so I think billions went to businesses that truly didn’t need it,” he said.
“Whatever we do in the future, I mean, I think we absolutely have to basically say to the extent that you’ve made taxable profit you’ve got to pay a portion or all of your loan back,” he added.
There is approximately $130 billion left of the money Congress appropriated for the program, though business can continue to apply for loans through August 8 under legislation passed this week.
Democrats have filed their own legislation to let businesses that already qualified for one PPP loan apply again if they have 100 employees or less and if they can show they have lost 50 percent or more of their revenue due to the coronavirus.
“The first round was to get money out quicker to save small businesses. The second round needs to be targeted to those small businesses that really need the help,” said Sen. Ben Cardin (D-Md.), the top Democrat on the Small Business Committee.
Cardin and Sen. Jeanne Shaheen (D-N.H.) are negotiating with Rubio and Collins on what a second round of PPP should look like, with Shaheen noting that she was “hopeful and cautiously optimistic” that they would be able to strike an agreement.
Treasury Secretary Steven Mnuchin told House lawmakers that he was already having conversations about using the money left over in PPP to fund another round of help for businesses most impacted by the coronavirus.
“I’ve already had conversations with the SBA committee in the Senate about repurposing that $135 billion, and think that should be done, and look forward to working with both the House and the Senate so that we can pass legislation by the end of July,” he said.
Rubio predicted that a larger potential fight is how much new money the PPP program could need, rather than potential restrictions that will likely be included.
“I think our bigger challenge is going to be how many people and how much can we help them with whatever money is leftover in PPP vs having to add additional spending,” he said.
He added that “whatever we need on top of that, if we do need more money on top of that, that’s going to be the big fight that you might see.”