Lawmakers are considering stricter parameters for small businesses to qualify for the second round of PPP funding. Lawmakers will iron out the specifics of these restrictions upon returning from recess on July 20.
Congress extended the deadline for small businesses to apply for the potentially forgivable loans from June 30 to Aug. 8. Approximately $130 billion in allocated funding has not been used.
The $670 billion PPP fund was created by Congress in March to provide pandemic relief to small businesses with 500 or fewer employees. These loans are forgivable if the businesses use funds for payroll costs and expenses such as interest on mortgages, rent, and utilities.
Senator Marco Rubio (R-Fla.) chairman of the Small Business Committee was recently asked by reporters about including a method to measure which businesses qualify for additional PPP funds.
“I think everyone understands that’ll have to be a part of it in the second round … So I think that’ll most definitely, in my view, be a part of it,” said Rubio.
Sen. Susan Collins (R-Maine) told The Hill she also agrees that additional restrictions would be included in the second round of PPP aid.
“It would have a revenue-loss test … and it would probably also have a lower number of employees” as a ceiling to qualify, Collins told The Hill about the next coronavirus bill.
Collins indicated that it was their goal to have a draft by the time lawmakers return to Washington on July 20.
Since implementing the pandemic relief for small businesses, lawmakers have been looking at ways to improve the program to ensure those businesses that most need the funds actually get them.
Lawmakers recently changed the loan application date, since the effects of the pandemic continue to be felt and businesses are still not fully reopened. Congress also changed the allocation that the Treasury had established using 75 percent of the funds for payroll to 60 percent after businesses’ needs were taken into account.
The PPP has gotten bipartisan praise as being successful, but it has also come under fire because, during the program’s initial stage, some large corporations disclosed that they were able to use loopholes to qualify for funds.
“We have all heard the stories — stories of big businesses with thousands of employees that found loopholes to qualify for these loans, universities with massive endowments accepting these loans, and even small businesses taking these loans when they haven’t seen a downturn in their revenue,” said Sen. Rick Scott (R-Fla.).
Sen. Ron Johnson (R-Wis.) said he supports using the remainder of the money in the PPP to create a new round of the program but wants a more targeted approach.
“Let’s try and direct future financial aid to those workers those businesses that truly need it, and particularly those businesses that really are viable, can reopen, might need more capital, we just need to be smarter about how we approach it moving in the future,” Johnson said on CNBC.
The pandemic required, “we had to do something massive I think, by and large, that worked, but now we need to focus and really direct what we’re going to do in the future, based on what we’re dealing with right now,” added Johnson.
Lawmakers are currently negotiating ways to repurpose the leftover funds that would help smaller, hardest-hit businesses to tap into a more targeted second round of assistance. Senate Democrats have introduced a bill to permit small businesses to take out a second loan if they have 100 employees or fewer, including sole proprietorships and self-employed individuals, and have used up an initial PPP loan, or be on pace to exhaust the loan.
“The first round was to get money out quickly to save small businesses. The second round needs to be targeted to those small businesses that really need the help. That’s why our legislation targets it to small businesses under 100 workers, those that have economic needs that can be demonstrated,” said Sen. Ben Cardin (D-Md.), the top Democrat on the Small Business Committee.
Cardin and Sen. Jeanne Shaheen (D-N.H.) are working with Rubio and Collins on what the second round of PPP should look like.
Similarly, Sen. Marco Rubio (R-Fla.), chairman of the Senate Small Business Committee, told reporters on June 30 that he’s working on a more targeted approach for the $130 billion.
“My preference is that we hold on to the $130 billion that was in use and rather than having a revert, using that to fund the second round of assistance to small businesses. Obviously we’ll have to be more targeted at truly small businesses,” Rubio told reporters.
“I’m very concerned that a lot of minority businesses, particularly black-owned businesses already struggling to begin with, have access to capital.”