The U.S. Senate passed legislation on Wednesday that makes it easier for companies to access and use small-business relief loans intended to avoid mass layoffs during the pandemic, sending the first major restructuring of the program to President Trump for signature.
The bill, passed by unanimous consent, 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 House of Representatives last week passed the bill in a 417-1 vote.
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.
A National Federation of Independent Business survey released this week found that the initial eight-week window was ending for 7% of small businesses this week. Another 23% said the period ends for them next week, between June 8 and June 14. Just over one-third of businesses would have to finish spending the money in the second half of June.
More than $120 billion of relief loans remain available to help support businesses, and some lenders believe demand for the loans, currently dwindling, could be rekindled now that the forgiveness rules have been relaxed.
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, the Treasury also announced it would grant small businesses participating in the relief program more flexibility for nonpayroll expenses, new ways of calculating payroll costs, and a new exemption in case workers don’t return.
