Stimulus Bill Outlook UnclearOctober 22, 2020
On Oct. 20, the Senate failed to pass a standalone measure authorizing a second round of forgivable loans to small businesses. Nearly all Democratic Senators voted against the bill on a procedural vote that would have advanced the measure.
The rejected bill would have allowed small businesses the opportunity to apply for a second round of the Paycheck Protection Program (PPP) loans. The legislation would provide $258 billion to the Small Business Administration (SBA) for second draw PPP loans, relocating $137 billion from unspent funds.
The second draw would be limited to businesses with fewer than 301 employees that suffered at least a 35 percent drop in revenues in one of 2020’s business quarters compared to the same quarter last year. Those firms would be eligible for a loan set equal to 10 weeks of payroll up to $2 million, which would be forgiven so long as it was used to cover payroll and certain fixed costs such as rent, utilities, property damage costs, and coronavirus prevention measures such as masks and plexi-glass barriers.
The bill would also simplify the forgiveness application for both new and existing PPP loans under $150,000. The SBA shortened the forgiveness paperwork for loans under $50,000 earlier this month. Banks and credit unions, who effectively administer the loan program, have pushed to let even more borrowers use an easier forgiveness process. The measure would also retroactively expand the forgivable uses for the first round of PPP funds, which totaled $525 billion across 5.2 million loans.
On Oct. 21, the Senate is expected to consider a more expansive, but still “skinny” package that would provide larger unemployment benefits, more than $100 billion for schools, and more money for virus testing, tracing and vaccine development and distribution. That bill, released Monday, seemed nearly identical to a similar $650 billion measure the Senate declined to advance last month. More than half the money, or $350 billion, would be offset by rescissions of unspent funds.
The rejection of the standalone PPP bill came as time ran down on House Speaker Nancy Pelosi’s (D-Calif.) self-imposed Tuesday night deadline to reach a pandemic-related aid deal with the White House. Despite ongoing conversations with Treasury Secretary Steven Mnuchin the talks have largely stalled over the issue of additional aid to state and local budgets decimated by the coronavirus. While Speaker Pelosi has remained hopefulness, most Republicans and many Democrats still say it is unlikely the two will be able to shepherd a relief package through Congress in the coming weeks — because of both resistance in the Republican-controlled Senate as well as lingering differences between Speaker Pelosi and Sec. Mnuchin.
NSBA has been calling on Congress to put politics aside and pass additional emergency relief for small businesses before adjourning for the election. While employers are grateful for the relief provided by the CARES Act, it has not been enough to keep businesses afloat and those that were able to access relief in the spring are still in dire need of support. Thousands of businesses are in danger of closing their doors for good and millions of jobs are in jeopardy, unless Congress acts soon.