The Senate cleared a bill Wednesday evening that would modify the forgivable loan program for small businesses affected by COVID-19.
Senate Majority Leader Mitch McConnell, R-Ky., brought up the bill just after 7 p.m. and the measure passed by voice vote, sending it to President Donald Trump’s desk.
Sen. Ron Johnson, R-Wis., had objected a few hours earlier when Senate Minority Leader Charles E. Schumer, D-N.Y., had asked for unanimous consent to pass the bill that advanced out of the House 417-1 last week. Johnson said on the floor that he wanted additional changes put into the loan program, but hinted he could drop his opposition following more negotiating.
Johnson said he'd allow the unanimous consent request if McConnell along with the leaders of the Senate and House small business committees signed a letter clarifying that an extension of the Paycheck Protection Program to the end of December would apply only to spending and not extend the application deadline.
The Senate cleared the bill just a few hours later after McConnell asked that a letter be printed in the record. McConnell’s office declined to provide the letter, deferring to Johnson’s office. Johnson's office didn't respond to a request for the letter.
The work on the program is not over, however. McConnell said that Senate Small Business and Entrepreneurship Chairman Marco Rubio, R-Fla., and Sen. Susan Collins, R-Maine, will continue working on technical fixes.
Schumer said the Senate vote, while delayed, would avoid severe problems for loan recipients and make important changes to the program.
“This is an improvement that's much needed and comes at the last minute but not too late,” he said.
FiscalNote, parent company of CQ Roll Call, has received a loan under the Paycheck Protection Program.
The bill would make a handful of changes to the program, which offers companies forgivable loans that act like grants as long as the money is used mostly to pay employees.
The bill’s biggest change would extend the time period in which borrowers must spend loans in order to have the debt forgiven from eight weeks to 24 weeks. According to a recent survey from the National Federation of Independent Business, 23 percent of borrowing businesses will hit the eight-week deadline next week.
The bill would not add funds to the program, which has issued $510.3 billion in loans so far out of the $660 billion available. The lending pace has slowed considerably in the last few weeks, and the approved total has fallen from $513 billion in mid-May as some companies have returned loans.
The measure would lower a Small Business Administration threshold requiring businesses spend 75 percent of their funds on payroll to 60 percent. But the legislation as written would require companies to spend 60 percent on payroll or none of the loan would be forgiven.
Earlier in the day, Rubio said that was one of the “technical problems in the House bill that needed fixing." He said he wanted it corrected to clarify that the difference between the threshold and the amount paid to workers would have to be repaid.
And the bill would extend the amount of time small businesses have to pay back loans from two years to five, if they don’t qualify to have the loan forgiven.
Johnson and Sen. Mike Lee, R-Utah, had been opposed as senators maneuvered to get the legislation to the floor. Both oppose a provision that might have pushed the loan application deadline from June 30 to Dec. 31.
When asking for the letter to be entered into the Congressional Record Wednesday afternoon, Johnson said, he wanted assurances the program wouldn’t be authorized to accept applications through the end of the year.
“We don't want to see this program automatically reauthorized until the end of December. Now there's some dispute as to whether the language actually does that. Sounds like the intent was not to do that, it was just to allow people to spend money through the end of December, which we have no problem with,” he said.
Johnson told reporters earlier Wednesday that he supports the program, but wants to see specific changes preventing businesses that haven’t suffered from the pandemic from getting the loans.
“It did a pretty good job of getting money quickly in the hands of businesses that needed it,” Johnson said. “The problem is that it got money in the hands of businesses that didn't need it as well."
The House bill “basically reauthorizes the program through Dec. 31, setting up a massive new infusion into the program without the reforms that I think really need to be placed so people that don't need it don't keep getting it,” Johnson said.
The Senate tried to “hotline” a separate extension bill before its Memorial Day recess but ran into GOP objections.