House Passes New Democrat Coalition-Endorsed Legislation to Improve PPP
Washington, DC – Today, the House passed the New Democrat Coalition-endorsed bipartisan Paycheck Protection Program Flexibility Act co-introduced by New Dem Rep. Dean Phillips (MN-03).
The Paycheck Protection Program (PPP) is providing essential support to millions of small businesses across the country. Unfortunately for many these businesses, the terms can be too inflexible to provide the help and stability PPP was intended to provide to help weather the economic storm. Rep. Phillips’ legislation, as amended, makes critical improvements to PPP, including:
- Allowing forgiveness for expenses beyond the 8-week covered period to up to 24 weeks
- The 8-week timeline does not work for local businesses that are prohibited from opening their doors or will only be allowed to open with restrictions. Businesses should have the flexibility to spread the PPP loan proceeds over the full course of the crisis until demand returns. Otherwise, employees will simply be furloughed at the expiration of the 8 weeks, defeating a major goal of the program.
- Easing restrictions limiting non-payroll expenses to 40% of loan proceeds
- In order to survive, businesses must pay fixed costs. For many businesses, payroll simply does not represent 75% of their monthly expenses and 25% does not leave enough to cover mortgage, rent, and utilities. Retaining employees is not possible if a business cannot retain their physical location
- Permitting the restructuring of existing loans to up to five-year terms
- 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 is the same for many other industries: it will take many businesses more than two years to achieve sufficient revenue 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 capital to weather the crisis. Receiving both should not be considered double- dipping. Businesses need access to both sources of cash flow to survive.
- Providing a rehiring safe harbor for businesses unable to rehire employees
- To receive loan forgiveness under PPP, a business must rehire employees by a deadline of June 30, 2020. However, due to stay at home orders and other issues, this is not feasible in many cases. To mitigate this unintended consequence, businesses that make a good faith attempt to rehire employees, but are unable to, should still be able to receive loan forgiveness.
“The Paycheck Protection Program has been a lifeline for so many Main Street employers during this public health and economic crisis. Congress needs to ensure it’s a success,” said NDC Chair Derek Kilmer (WA-06). “This legislation – led by Coalition member Dean Phillips – makes important, commonsense improvements to the PPP to ensure local employers can continue to weather the storm. I am proud the New Democrat Coalition endorsed this bill that will help provide much-needed support to American families and small businesses during these difficult times. Now it’s time for the Senate to act and pass this bill as soon as possible so small businesses can realize this relief quickly.”
“Representation begins with listening, and I am hearing from too many Minnesota small business owners who have received PPP loans but are afraid to use the money because of the inflexible, one size fits all rules - and others who are not applying for aid at all out of fear and confusion,” NDC Rep. Dean Phillips (MN-03) said. “It won’t matter how much money we appropriate if the distribution mechanisms are broken. Congress now has an opportunity to fix what’s broken and make this important relief program more accessible and useable to the small businesses that need it the most. I am encouraged by the bipartisan cooperation of my colleagues in the House and Senate, and look forward to working with them to push these reforms over the finish line without delay. Every day counts, and time cannot be wasted.”
For over two months, the New Democrat Coalition (NDC) has been working with New Dem Members, public health officials, and economic experts to put forward bold ideas and innovative solutions to aggressively respond to the pandemic and recession. The NDC pushed to make improvements to PPP in the Heroes Act by expanding eligibility, extending loan terms, addressing certain fees and guarantees, and providing more certainty to small businesses. The NDC also put forward a comprehensive package of policy recommendations and priorities for inclusion in Congress’s coronavirus response and economic recovery packages. A significant majority of the Coalition’s recommendations were included in H.R. 748, the Coronavirus Aid, Recovery, and Economic Security (CARES) Act and H.R. 6800, The Heroes Act.
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