New bill would allow small businesses to get second PPP loan
Some small business owners may be able to apply for a second Paycheck Protection Program loan if a new bill introduced on June 18 becomes law.
The law, known as the Priority Paycheck Protection Program Act (P4), would allow businesses with less than 100 employees to apply for a second loan if they have exhausted (or are about to exhaust) their first PPP loan and may show a 50% loss in revenue due to the COVID-19 pandemic. Business owners must also show that they need the money for eligible payroll and non-wage costs.
“Many small businesses will continue to struggle in the weeks and months to come,” said Senator Ben Cardin (D-MD). “Congress must again urgently act to support our most vulnerable small businesses through this crisis, so that our economy can recover as quickly as possible from the pandemic. Every business that we prevent from going bankrupt now is a business that will be able to create jobs during the recovery. “
Ranking member of the Cardin Small Business Committee, Senator Chris Coons (D-DE) and Senator Jeanne Shaheen presented the version of the bill to the Senate. Representative Angie Craig (D-MN) and Representative Antonio Delgado (D-NY) presented the accompanying invoice in the House.
Senators argue that some small businesses are still struggling because the shutdown lasted longer than originally expected when Congress implemented the program.
“In conversations with small businesses up and down the state of Delaware, it became clear that many employers in vital industries are in need of increased federal assistance through the Paycheck Protection Program. . Even as the closures end, countless Delaware businesses are struggling to survive this crisis, ”Coons said in a statement.
Senators announced their intention to introduce the bill last week – and asked Treasury Secretary Steven Mnuchin about it during a small business committee hearing focused on the implementation of the CARES law. Mnuchin did not say whether he supported the bill, but said he was “open-minded.”
“We absolutely believe that small businesses – and, by the way, many large companies in certain industries – are definitely going to need more help,” Mnuchin told Shaheen.
Yahoo Finance contacted the Treasury Department for a statement on the now released legislation, but did not immediately receive a response.
Senators behind the bill said that to ensure that the most struggling businesses get “P4 loans,” publicly traded companies are not eligible and hospitality and hosting businesses with multiple locations. are limited to a total loan amount of $ 2 million. The bill would set aside the lesser of $ 25 billion or 20% of P3 funds for employers with less than 10 employees and businesses in underserved and rural communities – a “core priority” for Coons.
“They had the hardest time initially connecting with the lending banks and the SBA in the first round and, frankly, they are also the ones closest to bankruptcy, because our economy is not reopening as quickly as many. ‘between us thought months ago. we passed the CARES law, ”Coons said in an interview with Yahoo Finance.
The bill also directs the SBA to issue guidance to prioritize smaller businesses and request demographic information on recipients of P4 and PPP loans.
“The economic fallout from COVID-19 has been an existential threat to small businesses in our country and Congress cannot abandon its efforts to get them through this crisis,” Shaheen said in a statement.
“This legislation gives priority to small businesses, especially those in the restaurant and hotel industries, which have been particularly affected in recent months.”
The SBA has approved more than $ 513 billion in PPP loans, which means over $ 100 billion in funding is still available.
The National Federation of Independent Businesses told Yahoo Finance that many of its members anticipate needing additional financial assistance and that it is open to proposals that would allow more PPP loans.
Kevin Kuhlman, vice president of federal government relations for the NFIB, said the 50% revenue loss requirement in Bill P4 could be problematic.
“Even if a business has experienced a 25% or 30% loss in revenue and has high fixed costs or accounts payable, it’s also going to have a hard time,” Kuhlman said.
Coons said some changes may be on the table as he struggles to build support for the legislation.
“There are a number of small adjustments we could end up making,” Coons said. “I think it’s important that we find ways to work together in a bipartisan fashion to quickly provide additional resources to the businesses most affected.”
The bill would also extend the application deadline for PPP loans from June 30 to December 30. And the deadline for a second loan would be October 1. The SBA administrator would have the discretion to extend the deadline if necessary.
In an interview with Yahoo Finance’s ‘On the Move’, the French Hill (R-AK) rep said he would be willing to extend the deadline for filing PPP applications beyond June 30 – although that he did not comment on the specific legislation.
“Not necessarily appropriate more money, but making those existing credits available to new small businesses that have been doing well – maybe in April and May – but who might need to access the funds, in fact, in July and August.” because they are trying to open faster rates, ”Hill said.
Yahoo Finance contacted Sen. Marco Rubio (R-FL), chairman of the small business committee, but his office did not respond.
Coons said he was working on a Republican cosponsor for the bill and “it might be possible” for the Senate to eventually pass the legislation by unanimous consent.
This story was updated on June 24 with comments from Senator Coons.
Jessica Smith is a reporter for Yahoo Finance based in Washington, DC Follow her on Twitter at @ JessicaASmith8.