The Senate made headway on a bipartisan proposal to make small-business loans more flexible, though final passage will need to wait for bicameral discussions with the House, which returns next week.
The plan unveiled Thursday would tweak the so-called Paycheck Protection Program to give small-business owners double the time to spend loan funds and still have their debts wiped clean. It would extend the loan forgiveness period from eight weeks to 16 weeks and allow businesses to use loan funds to buy personal protective equipment and make other investments to reopen safely.
The measure would also extend the program through December, although it provides no additional funding. And it makes clear that borrowers and lenders wouldn’t be held liable for abiding by previous program guidance.
Sen. Susan Collins, R-Maine, offered opening remarks about the measure on the floor Thursday but didn't seek unanimous consent to pass it. Majority Leader Mitch McConnell later wrapped up legislative business for the week without movement on the small-business bill.
“Hopefully, within the next couple of days, we can have a bicameral understanding and get it done, hopefully by [unanimous consent]," said Maryland Sen. Benjamin L. Cardin, the ranking Democrat on the Small Business Committee.
FiscalNote, parent company of CQ Roll Call, has received a loan under the Paycheck Protection Program.
The progress toward a deal was promising enough that Sen. Cory Gardner, who had threatened to keep the Senate from recessing for the Memorial Day break, backed off his objection.
Gardner, R-Colo., also persuaded McConnell to bring up his bill to permanently reauthorize the Land and Water Conservation Fund after the recess. The measure would also provide about $12 billion for deferred maintenance at national parks.
“We're very close to a number of things that are needed,” said Gardner, who faces a tough reelection fight this fall. “We’ve always got more work to do. I feel good about what we can hopefully accomplish here.”
'It's the Senate'
Senate Small Business Chairman Marco Rubio, R-Fla., earlier said it was possible the measure could pass Thursday. But the "hotline" process affords any one senator the opportunity to gum things up with an objection.
"I don't know of anyone objecting, but it's the Senate," Rubio said. "Sometimes people object for unrelated reasons."
While the loan program has proved popular with many struggling businesses, many others have found the loan rules too restrictive.
Lawmakers from both parties now agree that a rule requiring loan money to be spent within eight weeks to be forgiven proved too restrictive, since many businesses — particularly restaurants — must wait longer before they can reopen.
But even if the Senate passes its bill to extend the term to 16 weeks, there's no guarantee of putting a PPP bill quickly on President Donald Trump's desk.
Restaurants and others have been seeking up to 24 weeks to give them time to spend the money on required payroll costs, since many will remain closed for the duration of the original two-month forgiveness period.
The House passed a massive $3 trillion aid package on Friday that includes the extension to 24 weeks, which is also contained in separate legislation the House plans to take up next week when that chamber is back in session.
If a bicameral agreement is reached, Cardin said, the Senate could pass it next week during a pro forma session. McConnell said the Senate won't be in regular session until June 1.
Bipartisan talks on a broader relief package have yet to begin. Republican Senate leaders and the Trump administration has sought a “pause” to determine how well previous relief measures have worked and what more needs to be done.
Asked if he expected to pass a broader relief package in June, Gardner said, “I think we have to. This place has no choice.”
Treasury Secretary Steven Mnuchin endorsed the effort to extend the small-business loan duration Thursday in a forum hosted by The Hill.
“One of the things we’re working with Congress on, and there is bipartisan support, is lengthening the 8-week period,” he said. “I know the restaurants had asked for 24 weeks. But that’s something we definitely want to fix. It doesn’t cost us any more money and there is bipartisan support.”
Congress has provided $659 billion to offer forgivable loans to small businesses that had to shutter their doors because of the COVID-19 pandemic.
In addition to extending the deadline for companies to spend their loan funds, the bill headed to the House floor next week would extend the time businesses have to rehire employees and qualify for loan forgiveness under the program beyond the existing June 30 deadline. It would also extend the period for paying back portions of the loans that aren’t forgiven from two to five years.
Extending the loan terms would allow businesses to make smaller payments on the amounts that aren’t forgiven under the program.
The House bill, introduced by Reps. Chip Roy, R-Texas, and Dean Phillips, D-Minn., would also eliminate the “75-25 rule” implemented by the White House that says businesses have to spend at least 75 percent of the loan on payroll costs and no more than than 25 percent on other expenses like rent and utilities. Speaker Nancy Pelosi on Wednesday called the rule “debilitating.”
Changes to the 75-25 requirement, which wasn’t spelled out in the law creating the program, would benefit businesses with high capital costs relative to labor expenses, like bars and shops that pay more in rent than wages.
But Mnuchin appeared resistant to lifting the requirement that businesses spend 75 percent of their loan money on payroll. “We want most of this money to go to workers and that we believe the 75 percent was exactly consistent with the way the program was designed,” he said at The Hill’s virtual event.
The change is not included in the Senate bill introduced Thursday.
Neither bill would add additional money to the program. An initial allocation of $349 billion lasted less than two weeks before running dry. Congress then supplemented it with another $310 billion.
“Right now the demand for it has slowed down a little bit, actually,” Thune said. “I mean it’s not as heavily subscribed as it was early on.”
Mnuchin said there was about $100 billion of funding still available in the program.
Jennifer Shutt, Jim Saksa and Doug Sword contributed to this report.