Speaker Nancy Pelosi on Tuesday previewed additional small-business relief that Democrats plan to include in their next coronavirus bill, including an extension of the loan forgiveness period of the so-called Paycheck Protection Program.
“We’re going to be again strengthening PPP, expanding support beyond the PPP as it has been originally presented, and then having more resources,” the California Democrat said during a webinar with the Small Business Roundtable.
Various small-business representatives spent the hour speaking with Pelosi about what provisions they hoped Congress would include in the next relief bill, and most mentioned the need to extend the duration of the PPP loans, which currently provide businesses ten weeks’ worth of payroll. The loans are forgivable if the entities use them primarily to cover payroll over an eight-week period.
Pelosi assured the business representatives that the loan period would be extended in a bill Democrats are currently drafting. Committee chairmen have submitted to leadership proposed text of their portions of the bill, Pelosi said, adding that the combined product could be released “in the next couple of days.”
Earlier Tuesday, House Oversight Chairwoman Carolyn B. Maloney said Democratic leaders have committed to include $25 billion for the U.S. Postal Service in the bill.
Democratic leaders are still weighing whether to have the House vote on the bill in an effort to kickstart bipartisan negotiations or wait until there’s a bipartisan product. A vote on the Democrats’ version could occur as early as next week.
In the small-business relief portion of the legislation, Democrats plan to eliminate a requirement that businesses spend 75 percent of the loan on payroll, which limits the use of the money for rent and other expenses. Companies with high fixed costs, like expensive rent for a downtown shop, have said the PPP’s strict spending rules undermine the program’s efforts to save them.
“I don’t even know why we have that in there,” Pelosi said of the current program requirements. “I guess to make sure people are spending it on employees. But we want to help the business, we don’t want to complicate [things].”
FiscalNote, parent company of CQ Roll Call, has received a loan under the Paycheck Protection Program.
Pelosi said the Democrats’ next bill would also do more to set aside money specifically for very small businesses. The most recent relief package set aside $60 billion of PPP money for smaller banks who were seen as better placed to provide loans to underserved rural communities and minority- and women-owned businesses.
But a recent Goldman Sachs poll found that black-owned businesses were less likely to have applied for a PPP loan — 79 percent had, compared to 91 percent of all small-business owners surveyed — and were less likely to have had their loans approved, with just 40 percent authorized compared to 52 percent overall. Minority businesses have fewer employees on average and are less likely to have existing relationships with traditional lenders such as banks and credit unions.
Pelosi said she’s had conversations with Treasury Secretary Steven Mnuchin about why the loans weren’t going to those smaller businesses and he told her it’s because it’s not required.
“So what we’d like to see is if we couldn’t do something in the next bill that went beyond just saying that the set-aside was for the lenders in these communities. … We do have some requirements,” she said.
One criterion, according to Pelosi, would be to set aside money for businesses with 25 or fewer employees.
“I’d like to make it 10, frankly, but I think it’d probably survive the process at 25,” she said.
The Democrats’ bill would also expand small business relief to nonprofits that were previously excluded, such as 501(c)(4) and 501(c)(6) organizations, Pelosi said.
Pelosi acknowledged that the PPP would never be able to help the roughly 30 million small businesses throughout the country and that other proposals might be more efficient in providing relief to all. She said a guaranteed income proposal from Rep. Pramila Jayapal, D-Wash., and Sen. Elizabeth Warren, D-Mass., was “very worthy of consideration.”
Jayapal’s bill would provide employers a three-month grant to cover worker wages and benefits, retroactive to March 1.
“A path from 3 million to 30 million is a long road,” Pelosi said, referencing the roughly 3 million businesses benefiting from PPP. “And this other paycheck guarantee might be a faster route for us to go.”
The relief measures enacted so far aren’t stopping many businesses from closing. A survey from the U.S. Chamber of Commerce released Tuesday found that a quarter of small businesses have temporarily closed due to the pandemic, and another 40 percent said they will likely shut down temporarily within the next two weeks.
“There’s no amount of government assistance that will be able to replace the ability to safely reopen,” said Neil Bradley, the chamber’s chief policy officer. “The assistance provided by programs like the PPP have helped but they are a bridge, and we have to get to the other side of that bridge."
The chamber poll also found that 43 percent of small-business owners feared they had less than six months before they closed for good. Another survey by Goldman Sachs found that just 77 percent of owners felt confident their small businesses would survive the pandemic.
Bradley said the next package would need to help low-margin companies that rely on large volumes of customers to turn a profit, such as bars, restaurants and movie theaters. He has just begun sharing ideas with other business groups and those on the Hill about what is needed.
“It should serve, in particular, those businesses that need a bridge until full occupancy,” he said.