Treasury Secretary Steven Mnuchin said Monday that he was open to working with Congress to make key fixes to the small-business relief program, amid growing complaints from various businesses that the current rules are restraining them.
Mnuchin signaled an openness to allowing businesses to use their relief loans for more non-payroll costs, such as rent and other overhead costs, and to giving businesses more time to spend the money given to them.
The Small Business Administration’s relief program, called the Paycheck Protection Program, provides loans to small businesses that will be forgiven as long as they use 75% of the loan for worker salaries and for the loan to be spent over an eight-week period.
Regarding making the 75% rule more flexible to allow for more overhead costs, Mnuchin said, “If Congress wants to change that rule, I’m happy to work with Congress if there’s bipartisan support to do that.”
He said that giving businesses more time to spend the money might be an important consideration for restaurants.
“Many of the restaurants are just beginning to open up and have said that they’d really like to hold the money. They can’t do that; that’s not something we can do. But we’ll look at a technical fix,” Mnuchin said in an interview on CNBC.
Currently, if restaurants don’t spend the money within eight weeks, they lose the ability to have their loan forgiven, adding even more costs to their dire situation. Restaurants have warned that the eight-week rule is particularly unworkable for them because, in many parts of the country, they can’t reopen their dining rooms yet.
The Small Business Administration’s inspector general, Hannibal “Mike” Ware, said in a Friday report that the agency’s current forgiveness restrictions for the relief program “could result in an unintended burden to the borrowers.”
The program was initially funded with $350 billion as part of the massive $2.3 trillion CARES Act relief package. The program was given an additional $321 billion last week after the initial funds ran out in just two weeks.
As of Sunday afternoon, the agency said it had approved $188 billion in loans since the program relaunched on April 27. The total loans approved on Sunday were approximately $900 million lower than the total that the administration said was approved on Friday. The agency said the decline over the weekend was due to “canceled loans,” highlighting concerns that businesses are growing cautious of borrowing money from the government because of restrictive loan forgiveness rules.
