House Passes Economic Stimulus BillMay 18, 2020
On Friday, May 15, the U.S. House of Representatives passed 208-199 a $3 trillion economic stimulus bill, the Heroes Act (H.R. 6800), that would make some major changes to small business loan programs. The bill would make several adjustments to the Paycheck Protection Program (PPP), which offers low-interest loans that can be forgiven if borrowers agree to maintain their payrolls. The revisions would expand the universe of organizations able to receive the loans and limit the Trump administration’s ability to restrict how the loans are used. . Fourteen Democrats opposed the bill, and just one Republican supported it, Rep. Peter T. King (R-N.Y.).
Among the provisions in the bill is one that would allow nonprofits of any kind to apply for Paycheck Protection Program loans. While the idea has bipartisan support, it will likely also create controversy because it would open up the program to 501(c)(6)s, which include business trade associations—such as NSBA and countless small and local chambers of commerce.
Another measure would prevent the Small Business Administration (SBA), which runs the program, from limiting the portion of the loans that can be spent on non-payroll costs if borrowers want the loans forgiven. The SBA and the Treasury Department decided at the outset of the program that businesses could spend no more than 75 percent of the forgivable amount of the loans on expenses outside of payroll. Businesses have complained that the cap is too onerous. Yet, Treasury Secretary Steven Mnuchin has refused to ease the requirement on his own but says he’s open to working with Congress on that.
Addressing another major complaint from businesses, the bill would give borrowers 24 weeks to spend loan funds, an increase from the current eight weeks under current law.
The bill would not appropriate new funding for the program, but it includes carve-outs for nonprofits and small businesses with fewer than 10 employees, as well as a set-aside for community financial institutions.
In addition, the bill includes $10 billion for Economic Injury Disaster Loan grants.
The House Small Business Committee circulated two summaries of the changes relative to small-business programs; a section-by-section outline of the changes to the PPP here, and a more detailed summary here. The full text of H.R. 6800 , is here. A one pager on the legislation is here. A section-by-section summary is here. A resource on the state and local relief provisions is here.
In the Senate, it is unlikely any bill will emerge before the Memorial Day recess, and even when or if one does, it likely will be vastly different from the House-passed bill. Senate Majority Leader Mitch McConnell (R-Ky.) has been working on a bill with Sen. John Cornyn (R-Texas) which would include certain employer liability exemptions, and Sens. Susan Collins (R-Maine) and Bill Cassidy (R-La.) are working on funding legislation for states and cities, but it isn’t clear when that bill will be done either.
Given the fact that funds still exist in the Paycheck Protection Program, McConnell has said he doesn’t see a major sense of urgency to rush through another massive spending bill, yet many in the Senate–Republicans included–think some kind of stimulus to states and cities is necessary at some point.