The House of Representatives is expected to pass major changes to the small business pandemic relief program to make it easier for companies to access and use the loans.
The changes will allow small businesses to use their funds over 24 weeks instead of eight, extend the coverage period the money can be applied for and used to Dec. 31 (instead of June 30), and lower the requirement to use funds on payroll from 75% down to 60%.
The bill, known as the Paycheck Protection Program Flexibility Act of 2020, has bipartisan support and has been introduced by Rep. Dean Phillips of Minnesota, a Democrat.
The Small Business Administration’s relief program, called the Paycheck Protection Program, provides struggling small businesses with loans that would, under current law, only be forgiven as long as 75% of the loan went to paying for worker salaries and the loan was spent over an eight-week period. It was initially funded with $350 billion as part of the massive $2.3 trillion CARES Act relief package.
Earlier in May, Treasury Secretary Steven Mnuchin, who is in charge of administering the loans, signaled an openness to working with Congress to make the changes outlined in the bill. Earlier in the month, Treasury also announced it would grant small businesses participating in the relief program more flexibility for non-payroll expenses, new ways of calculating payroll costs, and a new exemption in case workers don’t return.
