Cicilline, House Move to Further Expand Access to Loans for Most Vulnerable of Small Businesses

Thursday, May 28, 2020

WASHINGTON - Democratic Policy and Communications Committee (DPCC) Chair David N. Cicilline (RI-01) applauded today's House passage of the bipartisan Paycheck Protection Program (PPP) Flexibility Act that will make the loan program more accessible and available to the small businesses that need help the most. The legislation gives small companies 24 weeks to use their loan, up from eight weeks under the current law.


"Our first priority right now is protecting the lives and livelihoods of the American people," said Cicilline. "This legislation will make it easier for the smallest of small businesses to access PPP relief. Mitch McConnell should bring the Senate back from vacation and pass this bill."


Under the current Paycheck Protection Program, the PPP loan converts to a grant as long as the small business uses the loan within eight weeks of the CARES Act enactment – that is, by June 30 – and uses at least 75 percent of the loan proceeds on payroll and the rest for such necessary expenses as rent, mortgage interest, and utilities. Many small businesses, particularly very small businesses, have reported that, with these restrictions, the loans do not meet their needs.


The legislation passed by the House today makes the PPP program more flexible in the following key ways:


  • Allowing loan forgiveness for expenses beyond the 8-week covered period to 24 weeks and extending the rehiring deadline. Back in March, the PPP program was established as an eight-week program, ending on June 30.  However, it is clear that the economic effects of the pandemic will affect small businesses long past June 30.  The current eight-week timeline does not work for local businesses that could only very recently have customers and those that are only allowed to open with very heavy restrictions. Small businesses need the flexibility to spread the loan proceeds over the full course of the crisis, until demand returns.
  • Increasing the current limitation on the use of loan proceeds for nonpayroll expenses from 25 percent to 40 percent. Currently, under regulations issued by the Trump Administration, the PPP loans require that no more than 25 percent of loan proceeds can be spent on non-payroll expenses such as rent, mortgage interest, and utilities.  This limitation has prevented many small businesses, such as independent restaurants, from applying to the program because their rent is significantly more than 25 percent of their monthly expenses.  The 40 percent limitation in this bill is much more realistic.
  • Extending the program from June 30 to December 31. By ensuring the PPP program will operate for 24 weeks, rather than only eight, this bill will ensure that many more truly small businesses will be able to take advantage of the program.
  • Extending loan terms from two years to five years. According to the American Hotel and Lodging Association, full recovery for that industry following both the September 11, 2001 terrorist attacks and the 2008 recession took more than two full years.  This was also true for many other industries.  If the past is any indication of the future, it will take many businesses more than two years to achieve sufficient revenues to pay back the loan.
  • Ensuring full access to payroll tax deferment for businesses that take PPP loans. The purpose of PPP and the payroll tax deferment was to provide businesses with liquidity to weather the crisis.  Receiving both should not be considered double-dipping. Businesses need access to both sources of cash flow to survive.


The bipartisan Paycheck Protection Program Flexibility Act was introduced by Reps. Dean Phillips (D-MN) and Chip Roy (R-TX). It includes numerous co-sponsors from both parties, and is endorsed by the National Small Business Association, Small Business Majority, Small Business Roundtable, U.S. Chamber of Commerce, National Restaurant Association, Independent Restaurant Association, NFIB, U.S. Hispanic Chamber of Commerce, National Association of Women Business Owners, US Travel Association, American Hotel and Lodging Association, Associated General Contractors of America, National Independent Automobile Dealers Association, National Association of Wholesaler-Distributors, National Newspaper Association, National Association of Manufacturers, and others.



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