House Overwhelmingly Endorses Greater Flexibility for Small Business Aid Program

WASHINGTON – In an overwhelmingly bipartisan fashion, the House on Thursday passed legislation providing struggling small businesses with greater flexibility in using coronavirus relief loans.

The bill, which amends the Paycheck Protection Program enacted in March, passed by a vote of 417-1.

Introduced by Reps. Dean Phillips, D-Minn., and Chip Roy, R-Texas, the bill expands the original terms of the loans, giving businesses up to 24 weeks, up from the current eight weeks, to use the loans and extend the deadline for rehiring workers from June 30 to the end of this year.

It also gives small businesses the ability to spend more of the money on non-payroll costs. The current terms of the loans require recipients to use 75% of the funds on payroll and up to 25% on other costs to qualify for loan forgiveness.

The legislation changes the ratio to at least 60% on payroll and up to 40% on rent, overhead and other costs.

Speaking on the House floor before the vote, Phillips said, “At its core, representation begins with listening.”

“Our small business owners, the institutions of our main streets and the glue of our communities, are asking us to take actions to solve problems and engage in some good old fashioned teamwork,” he continued. “This bill will help people in the ways that they need, and we haven’t a moment to lose.”

In a statement released after the vote, Roy said, “For the past two months, I’ve heard from business owners in Central Texas who want to keep their employees on the payroll, continue serving their communities, and — mostly — stay afloat until they are allowed to be fully back open for business.”

“The Paycheck Protection Program has helped many of them do just that, but I have heard from far too many business owners that the program, as it stood, needed changes to make it work for them,” he said. 

“I didn’t want to see another local institution go out of business because Congress is more focused on politics than helping Americans who need it,” Roy continued. “Fortunately, our bipartisan bill puts Americans first and will ensure our favorite small businesses are around on the other side. I am thankful to my colleagues for their overwhelming support today, and I look forward to its swift passage in the Senate.”

A second bill authored by Phillips would have required the Small Business Administration to submit a report documenting the recipients of assistance of more than $2 million from the Paycheck Protection Program.

However, though the bill received the endorsement of a majority of House members — the vote was 269-147 — it failed to secure a two-thirds supermajority needed to pass under the fast-track process under which it was considered.

Democrats who support the bill argued it would give the entire program more transparency.

But Republicans mostly opposed it on the grounds it could expose businesses receiving the funds to public shaming.

Among those who rallied around the larger measure were the New Democrat Coalition and the Problem Solvers Caucus.

“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 New Democrat Coalition chair Derek Kilmer, of Washington State.

“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,” he said.

“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,” Kilmer said.

In a joint statement, Problem Solvers Caucus co-chairs, Reps. Tom Reed, R-N.Y., and Josh Gottheimer, D-N.J., said “small businesses are the backbone of our communities and neighborhoods, providing jobs and critical services to millions of Americans.

“We applaud the Problem Solvers Caucus for their bipartisanship in ensuring our small businesses and entrepreneurs are protected and have the support they need to get through these challenging times,” they said.

Among those not on Capitol Hill who cheered Thursday’s vote was the National Association for the Self-Employed.

“Small businesses across the country, including the self-employed, sole contractors and our country’s smallest businesses, continue to struggle amid the COVID-19 pandemic,” said Keith Hall, president and CEO of the group. “While the original CARES ACT was both historic and supportive of our community, the new provisions and changes outlined in today’s measure will offer additional extensions, flexibility and forgiveness requirements desperately needed for our nation’s small business community. Now more than ever does this vital part of our economy need it.”

But some maintain additional legislation is needed to help businesses that have challenges unique to their sector of the economy. Among these are independent restaurant owners.

Independent Restaurant Coalition, a group formed by chefs and independent restaurant owners across the country, said Thursday, that the passage of the bipartisan Paycheck Protection Flexibility Act is a sign that both parties agree that the Paycheck Protection Program can work better for independent restaurants.

“We are grateful for the leadership of Congressmen Dean Phillips and Chip Roy for leading the charge in the House,” the group said, adding, “President Trump last week acknowledged that these PPP changes are needed to help independent restaurants put people back to work, and today Republicans and Democrats worked together to put forward a bill that would do just that.

“As of today, over 40 million Americans have filed for unemployment, and restaurant employees have consistently accounted for the largest share of those looking for work,” the coalition’s statement continued. “Even if these changes to the PPP become law, independent restaurants face nearly insurmountable odds to staying open over the next year as they face increasing costs and are forced to operate with reduced seating.”

The coalition is urging Congress to pass a separate proposal introduced by Rep. Earl Blumenauer, D-Ore., last week, that would create a $120 billion restaurant stabilization grant program designed to help independent restaurants deal with the long-term structural challenges facing the industry due to COVID-19 and ensure they can reemploy 11 million workers. 

“America’s 500,000 independent restaurants are a vital piece of every community and neighborhood large and small,” Rep. Blumenauer said as he introduced The Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive (RESTAURANTS) Act of 2020 on May 20.

“These establishments are also uniquely vulnerable as we face the COVID-19 pandemic. Few industries have been as uniformly ravaged as the food service industry, which is why I am working with a coalition of culinary experts and advocates and pushing my colleagues in Congress to provide support. Local, independent restaurants are the beating heart of our communities. They need relief now,” he concluded.

“The paycheck protection program for independent restaurants is like building a bridge that doesn’t reach across the water. A stabilization fund will reach the other side and get us through this crisis,” the Independent Restaurant Coalition said.

The bill now heads to the Senate, which left for its Memorial Day recess last week before taking action on its own version of legislation to make changes to the small business loans.

The Senate version is largely similar to what the House has passed, but it only extends the timeframe for small businesses to spend the funds to 16 weeks instead of 24.

In the meantime, discussions over another round of economic stimulus relief remain on hold with the two parties at odds over how and when Congress should act.

House Democrats passed a wide-ranging $3 trillion relief package earlier this month — the Heroes Act — that would provide funding for state and local governments, coronavirus testing, rental and mortgage assistance, food stamps, another round of direct cash payments for individuals and families and an expansion of unemployment insurance.

Senate Republicans, however, have been focusing on securing liability protections for business owners and oppose renewing the expansion of unemployment insurance that was enacted in March.

The extra $600 per week in unemployment insurance is set to expire in July absent congressional action.