Bipartisan group of senators asks Treasury, SBA to loosen coronavirus loan restrictions

A bipartisan group of 19 senators has asked the Trump administration to allow recipients of small-business coronavirus relief loans to spend more of the money on nonpayroll expenses without penalty.

In a letter to Treasury Secretary Steven MnuchinSteven Terner MnuchinThe Hill's Coronavirus Report: BIO's Michelle McMurry-Heath says 400 projects started in 16 weeks in biotech firms to fight virus, pandemic unemployment total tops 43 million IRS faces obstacles with remaining stimulus checks On The Money: GOP turning against new round of ,200 rebate checks | Millions of Americans frustrated by delayed unemployment checks | Senate votes to give coronavirus relief program more flexibility MORE and Small Business Administration (SBA) Administrator Jovita Carranza released Wednesday, the senators called for increasing the loan forgiveness cap on the SBA’s Paycheck Protection Program (PPP) as some firms struggle to stay afloat.

The PPP allows small businesses facing financial peril because of the pandemic to receive a loan to cover eight weeks of payroll and other essential expenses. The loan can be converted entirely into a grant if at least 75 percent of it is used to cover payroll and keep workers off of unemployment insurance.

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The bipartisan group of senators is asking Treasury and SBA to reduce that threshold for forgiveness to 50 percent, citing the high costs of rent, mortgage and utility payments for many businesses who’ve received aid.

“If they are unable to cover these expenses, they will have to decide between keeping their doors open, at personal financial risk, or closing shop and laying off employees,” wrote the senators.

“These are businesses that will not recover. Such an outcome would result in mass layoffs that would shift more Americans onto unemployment, presenting significant long-term costs to families, businesses, and states," they continued.

The signatories included Republican Sens. John CornynJohn CornynGOP chairmen stake out turf in Obama-era probes Cornyn presses DOJ to release results of investigation into Larry Nassar probe Minority caucuses call for quick action on police reform MORE (Texas), John BarrassoJohn Anthony BarrassoHouse Democrats roll out 0B green transportation infrastructure bill IRS proposes guidance for expanded carbon capture tax credit No better time to modernize America's energy infrastructure MORE (Wyo.), Marsha BlackburnMarsha BlackburnGOP senators dodge on treatment of White House protesters Five things to know about Trump's legal power under the Insurrection Act Bipartisan senators call for investigation of TikTok's child privacy policies MORE (Tenn.), John BoozmanJohn Nichols Boozman7 GOP senators slam State Dept for 'slow and inefficient policy' on passports The Hill's Coronavirus Report: National Portrait Gallery's Kim Sajet says this era rewiring people's relationship with culture, art; Trump's war with Twitter heats up Congress headed toward unemployment showdown MORE (Ark.), Lindsey GrahamLindsey Olin GrahamBill aims to help farmers sell carbon credits Graham postpones Russia probe subpoena vote as tensions boil over Graham pushes back on Mattis criticism of Trump: 'You're missing something here, my friend' MORE (S.C.), Cory GardnerCory Scott GardnerSenate advances conservation fund bill, House introduces companion John Hickenlooper defies subpoena to appear for virtual hearing on ethics complaint Senate Republicans urge Trump to tone down rhetoric on protests MORE (Colo.), Roger WickerRoger Frederick WickerBottom line GOP faces internal conflicts on fifth coronavirus bill Senators weigh traveling amid coronavirus ahead of Memorial Day MORE (Miss.) and Kelly LoefflerKelly Loeffler7 GOP senators slam State Dept for 'slow and inefficient policy' on passports GOP women's group rolls out endorsements ahead of contested races Senators ask DeVos to adjust FAFSA form due to the coronavirus pandemic MORE (Ga.) and Democratic Sens. Bob MenendezRobert (Bob) MenendezGovernment watchdog: 'No evidence' Pompeo violated Hatch Act with Kansas trips No time to be selling arms to the Philippines Senate panel approves Trump nominee under investigation MORE (N.J.), Chris Van HollenChristopher (Chris) Van HollenDemocrats introduce bill to rein in Trump's power under Insurrection Act Democratic senators kneel during moment of silence for George Floyd Hillicon Valley: Twitter flags Trump tweet for 'glorifying violence' | Cruz calls for criminal investigation into Twitter over alleged sanctions violations | Senators urge FTC to investigate TikTok child privacy issues MORE (Md.), Dick DurbinRichard (Dick) Joseph DurbinGraham postpones Russia probe subpoena vote as tensions boil over Senate panel sends Trump appeals court pick to floor in party-line vote Democrats aim to amend Graham subpoena to include Trump allies MORE (Ill.), Michael BennetMichael Farrand BennetDemocratic senators kneel during moment of silence for George Floyd 21 senators urge Pentagon against military use to curb nationwide protests Warren condemns 'horrific' Trump tweet on Minneapolis protests, other senators chime in MORE (Colo.), Ron WydenRonald (Ron) Lee WydenCBO releases analysis on extending increased unemployment benefits Overnight Health Care: Hydroxychloroquine ineffective in preventing COVID-19, study finds | WHO to resume hydroxychloroquine clinical research | WHO says no evidence coronavirus is mutating Bipartisan lawmakers press Trump administration to get COVID-19 aid to Medicaid providers MORE (Ore.), Kirsten GillibrandKirsten GillibrandSenate Dems press DOJ over coronavirus safety precautions in juvenile detention centers Senate Democrat introduces bill to protect food supply It's as if a Trump operative infiltrated the Democratic primary process MORE (N.Y.), Kyrsten Sinema (Ariz.), Cory BookerCory Anthony BookerPaul clashes with Booker, Harris over anti-lynching bill Democratic senators kneel during moment of silence for George Floyd Rand Paul holding up quick passage of anti-lynching bill MORE (N.J.), Christopher CoonsChristopher (Chris) Andrew CoonsCoronavirus Report: The Hill's Steve Clemons interviews Michelle McMurry-Heath Republicans turning against new round of ,200 rebate checks Voting rights, public health officials roll out guidelines to protect voters from COVID-19 MORE (Del.), Patrick LeahyPatrick Joseph LeahyDemocrats introduce bill to rein in Trump's power under Insurrection Act Murkowski, Mattis criticism ratchets up pressure on GOP over Trump House punts on FISA, votes to begin negotiations with Senate MORE (Vt.) and Richard Blumenthal (Conn.).

The SBA is amid the second round of funding for PPP loans after approving $349 billion during a first round that lasted less than two weeks. The SBA is expected to deplete the second pot of $310 billion in funding by the end of this week after opening applications last Monday.

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While there is wide bipartisan support for PPP, lawmakers and small businesses advocates have grown increasingly concerned about the impact of the program’s quickly written requirements.

Small businesses advocates have urged the administration to give PPP recipients greater flexibility to use those loans to cover nonpayroll expenses or hold onto some of the money beyond the eight-week period targeted in the program.

Even so, Mnuchin said Monday that he doesn't "have the flexibility" to alter the terms of the program and said businesses who need help covering overhead costs should apply for an SBA Emergency Injury Disaster Loan (EIDL), which includes a smaller grant attached to a loan.

"Really, the purpose of this was to get workers back to work. And every dollar we spend here is a dollar we save on unemployment insurance," Mnuchin said in an interview on Fox Business Network. 

"The idea is that taxpayers would forgive the majority of the money that was going to the workers, which saves unemployment, and a reasonable amount of overhead. I think 25 percent overhead is very fair," he continued.