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 MnuchinMajor Russian hacking group linked to ransomware attack on Sinclair: report The Hill's Morning Report - Presented by Alibaba - Biden jumps into frenzied Dem spending talks Former Treasury secretaries tried to resolve debt limit impasse in talks with McConnell, Yellen: report 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 CornynCornyn raises more than M for Senate GOP Is the Biden administration afraid of trade? The Hill's Morning Report - Presented by Facebook - After high drama, Senate lifts debt limit MORE (Texas), John BarrassoJohn Anthony BarrassoSenate appears poised to advance first Native American to lead National Park Service Sunday shows preview: Senate votes to raise debt ceiling; Facebook whistleblower blasts company during testimony The Hill's Morning Report - Presented by Facebook - After high drama, Senate lifts debt limit MORE (Wyo.), Marsha BlackburnMarsha BlackburnSenator asks Facebook's Zuckerberg to testify at hearing on kids' safety TikTok, YouTube, Snapchat executives to testify at Senate hearing on kids' safety Buttigieg hits back after parental leave criticism: 'Really strange' MORE (Tenn.), John BoozmanJohn Nichols BoozmanArkansas legislature splits Little Rock in move that guarantees GOP seats Proposed IRS reporting requirements threaten taxpayer privacy, burden community financial institutions  More than ever, we must 'stand to' — and stand behind — our veterans MORE (Ark.), Lindsey GrahamLindsey Olin GrahamMayorkas tests positive for COVID-19 breakthrough case A pandemic of hyper-hypocrisy is infecting American politics Republicans' mantra should have been 'Stop the Spread' MORE (S.C.), Cory GardnerCory GardnerColorado remap plan creates new competitive district Protecting the outdoors: Three cheers for America's best idea Ex-Sen. Cory Gardner joins lobbying firm MORE (Colo.), Roger WickerRoger Frederick WickerSenate Republicans raise concerns about TSA cyber directives for rail, aviation 6 in 10 say Biden policies responsible for increasing inflation: poll Overnight Defense & National Security — Presented by Raytheon Technologies — Nation mourns Colin Powell MORE (Miss.) and Kelly LoefflerKelly LoefflerDraft Georgia congressional lines target McBath, shore up Bourdeaux Warnock picks up major abortion rights group's endorsement in reelection bid Trump endorses Hershel Walker for Georgia Senate seat MORE (Ga.) and Democratic Sens. Bob MenendezRobert (Bob) MenendezWhy is Trump undermining his administration's historic China policies? Senate GOP signals they'll help bail out Biden's Fed chair Democrats weigh changes to drug pricing measure to win over moderates MORE (N.J.), Chris Van HollenChristopher (Chris) Van HollenGOP tries to take filibuster pressure off Manchin, Sinema Overnight Energy & Environment — Biden set to restore national monuments rolled back by Trump Markey: Senate must pass reconciliation package before global climate summit MORE (Md.), Dick DurbinDick DurbinThe Memo: Cuts to big bill vex Democrats Progressives push back on decision to shrink Biden's paid family leave program Democrats struggle to sell Biden plan amid feuding MORE (Ill.), Michael BennetMichael Farrand BennetBuilding back better by investing in workers and communities Biden signs bill to help victims of 'Havana syndrome' Colorado remap plan creates new competitive district MORE (Colo.), Ron WydenRonald (Ron) Lee WydenUnder pressure, Democrats cut back spending The Memo: Cuts to big bill vex Democrats Democrats say they're committed to reducing emissions in Biden plan MORE (Ore.), Kirsten GillibrandKirsten GillibrandUnder pressure, Democrats cut back spending The Memo: Cuts to big bill vex Democrats Progressives push back on decision to shrink Biden's paid family leave program MORE (N.Y.), Kyrsten Sinema (Ariz.), Cory BookerCory BookerProgressives push back on decision to shrink Biden's paid family leave program Emanuel to take hot seat in Senate confirmation hearing Senate GOP signals they'll help bail out Biden's Fed chair MORE (N.J.), Christopher CoonsChris Andrew CoonsDefense & National Security — Military starts giving guidance on COVID-19 vaccine refusals Blinken pressed to fill empty post overseeing 'Havana syndrome' Who is afraid of the EU's carbon border adjustment plan? MORE (Del.), Patrick LeahyPatrick Joseph LeahyOvernight Energy & Environment — Presented by the American Petroleum Institute — Democrats address reports that clean energy program will be axed Overnight Health Care — Presented by Carequest — Colin Powell's death highlights risks for immunocompromised On The Money — Democrats tee up Senate spending battles with GOP 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.