House aims to address loopholes in PPP: Legislation now heads to Senate
The House voted Thursday to pass one of two bills aimed at improving transparency and accountability from SBA loan programs.
The Paycheck Protection Program Flexibility Act (H.R. 7010) and the TRUTH Act (H.R. 6782) are efforts to ensure that the Paycheck Protection Program and Economic Injury Disaster Loan programs work better for small businesses in Coastal Virginia.
“While I am disappointed the TRUTH Act failed in the House, I will continue to advocate for transparency and hold the SBA accountable to small business owners across Coastal Virginia,” said Congresswoman Elaine Luria, D-Va., who voted in favor of both bills.
“As a former small business owner, I empathize with the frustration felt by small business owners from our community. That’s why I voted in favor of swift passage of the Paycheck Protection Program Flexibility Act to make it easier for small businesses and non-profits to access critical SBA resources during the COVID-19 pandemic.”
The PPP provides small businesses and nonprofits forgivable loans to cover payroll and other costs, but critics pointed out that its rigid and arbitrary rules prevent many small businesses from receiving assistance that meets their needs. The SBA has also released little information on the implementation of the PPP or EIDL programs, which makes it difficult for Congress to conduct oversight on these programs that receive hundreds of billions of taxpayer dollars.
The Paycheck Protection Program Flexibility Act will make it easier for small businesses and nonprofits to benefit from PPP funds. It eliminates the requirement that limits non-payroll expenses to 25 percent of loan proceeds and provides loan forgiveness protections for businesses that are unable to rehire former employees.
Also, it allows businesses to spend PPP loan funds within 24 weeks, instead of the current eight weeks timeline, and prolongs the minimum maturity date of PPP loans from two years to five years.
“Through calls, emails, virtual roundtables, and telephone town halls, I’ve heard from hundreds of Central Virginia businesses and restaurants about PPP implementation issues. For small businesses and independent restaurants, the so-called ’75-25’ rule has been particularly onerous. As Central Virginia PPP recipients now prepare to apply for critical loan forgiveness, we need urgent reforms to PPP loan forgiveness rules that will respond to the needs of our communities on the ground,” said Congresswoman Abigail Spanberger, D-Va., who voted in favor of the Paycheck Protection Program Flexibility Act.
“This bipartisan bill would give Central Virginia’s small businesses and restaurants much of the flexibility they need to cover their expenses and keep their doors open. Through commonsense improvements to PPP loan restrictions, this bill would give our business owners additional freedom to make their own decisions as they contribute to the Commonwealth’s economic recovery. Our district’s thousands of small businesses have waited long enough for changes to PPP, and the Senate should now move quickly to send this legislation to the President’s desk.”