Small business owners share their difficult and confusing journeys in applying for the Paycheck Protection Program loan.
WASHINGTON – The Senate Wednesday passed legislation giving thousands of restaurants, nail salons and other small businesses greater access to the Paycheck Protection Program, the federal lifeline designed to help them stay afloat during the coronavirus pandemic.
Some Republicans initially objected to the measure over technical issues and a desire to close loopholes to prevent the money from going to businesses less in need of financial help. But they agreed to pass the bill while they work on legislation to make further reforms.
The bill, which overwhelmingly passed in the House last week and is now headed to President Donald Trump’s desk, loosens some key rules regarding loan repayment and spending restrictions of the PPP.
The program, created in March as part of the nearly $2 trillion CARES Act, has provided nearly 4.5 million small businesses with an infusion of cash to keep their workers on the payroll during the coronavirus pandemic that has devastated the U.S. economy and upended daily life.
The $660 billion programprovides businesses employing up to 500 workers forgivable loans of as much as $10 million. The average loan is $113,705, according to the Small Business Administration.
But many businesses said the program’s structure is too rigid to accommodate different types of small businesses, especially restaurants whose rent-heavy expenses do not fit well in a program that prioritizes rehiring of employees.
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The new changes would:
Lower to 60% from 75% the minimum portion of the PPP loan that must be spent on payroll. The rest must be spent on rent, utilities and other business-related expenses.
Extend from eight to 24 weeks the amount of time the loan can cover.
Extend from two to five years the time new PPP loans must be paid back if the amount provided doesn’t convert into a grant.
Senate Democratic Leader Chuck Schumer, said increasing the amount of money businesses can spend on non-payroll expenses is crucial to keep them running.
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“In my home state of New York with high rents, high utility costs, many businesses were frozen out when it was 25% but 40 will get them in,” he said on the Senate floor Wednesday. “And that applies to most of your high-cost areas throughout the country.”
The National Federation of Independent Businesses has endorsed the bill, saying it would clear up some of the confusion surrounding the program’s rules and give mom-and-pop enterprises more time and flexibility to open.
This article originally appeared on USA TODAY: Coronavirus: Senate passes Paycheck Protection Program reforms