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Senate passes small business loan revamp, overcoming resistance

But passing the bill in the Senate proved to be a challenge for Majority Leader Mitch McConnell and Minority Leader Chuck Schumer. Republicans including Sen. Ron Johnson (R-Wis.) resisted at first, with Johnson on Wednesday blocking an initial attempt by Schumer to pass the bill unanimously and demanding assurances about the legislation’s intent. He dropped his objections later in the day, allowing the Senate to quickly pass the bill and send it to Trump.

“We can’t wait any longer,” Schumer said on the floor. “Businesses are really suffering for lack of these changes.”

The legislative slowdown was the latest cloud of uncertainty over the popular Paycheck Protection Program, which has approved more than $510 billion in loans despite a rocky rollout. But passage of the legislation will likely help ease fears among businesses worried they will be stuck with the debt because requirements to have the loans forgiven are too burdensome.

The concerns addressed in the House bill are urgent for many businesses that are facing a closing window in which they can use the loans and still qualify for forgiveness. The House legislation would give borrowers 24 weeks instead of eight weeks to use the funds, in a recognition that the Covid-19 pandemic has kept businesses sidelined longer than lawmakers expected.

The bill would also give businesses greater flexibility in where they use the money by lowering the amount they must spend on payroll to qualify for full loan forgiveness — to 60 percent instead of 75 percent.

A National Federation of Independent Business survey released this week found that the eight-week window is ending for 7 percent of small businesses between now and Monday. Another 23 percent say the period ends for them between Monday and June 14. Just over one-third will have to finish spending the money in the second half of June.

More than $120 billion remains available for loans under the program, and some lenders believe demand could be rekindled if the forgiveness rules are further relaxed.

But the pleas for flexibility ran into complaints from some Republicans that the House bill would keep the program alive for too long and that the aid has gone to businesses that didn’t need it.

Johnson stood in the way of the bill after publishing a Wall Street Journal op-ed in which he said “a significant number of businesses that weren’t in danger of going under also received these grants.”

“Congress also should enact reforms that will prevent future funds from flowing to organizations that don’t need them,” he wrote. “This crisis is far from over, and pressure will build to authorize even more spending. Our ability to expand federal debt is not unlimited. Any funding must be carefully distributed.”

Johnson voiced concern on the Senate floor Wednesday that the legislation would reauthorize the program through the end of the year without further reforms. He asked that committee chairs sign a letter saying that wasn’t the intent. Lawmakers disagree on that interpretation of the bill, a point Johnson acknowledged, with some reading its date changes as just allowing program funds to be spent until the end of December. Sen. Mike Lee (R-Utah) raised similar objections to Johnson’s.

A senior House Democratic aide said House Small Business Committee Republicans signed off on the language the House passed and that “this is more about internal Senate R politics.”

Other Republicans raised concerns with the drafting of the House bill but didn’t try to block Senate passage. Senate Small Business Chair Marco Rubio (R-Fla.) and Sen. Susan Collins (R-Maine) say there is a serious drafting error in the House legislation that would deprive businesses of having any portion of their loan forgiven if they don’t hit the 60 percent payroll requirement.

Source: politico.com
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