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U.S. House Considers PPP Reform Stand-alone Bill

Congressman Chip Roy (R-TX), along with Congressman Dean Phillips (D-MN), Congressman Tom Emmer (R-MN), and Congressman Fred Upton (R-MI)  introduced H.R. 6886, the Paycheck Protection Flexibility Act. The bipartisan bill will make necessary changes to the Paycheck Protection Program (PPP) as business owners nationwide have expressed concerns with the program.

Congressman Roy stated, “Unfortunately, for many of these business owners, particularly local restaurants, hotels, and those in the hospitality industry, the terms are too inflexible to provide the help they need to weather the economic storm.”

The legislation will:

  • Allow forgiveness for expenses beyond the 8-week covered period.
  • Eliminate restrictions limiting non-payroll expenses to 25% of loan proceeds. 
  • Eliminate restrictions that limit loan terms to 2 years.  
  • Ensure full access to payroll tax deferment for businesses that take PPP loans.
  • Extend the rehiring deadline to offset the effect of enhanced Unemployment Insurance.  

To view the bill text, click here.

To read the press release from Congressman Phillips, click here.

To read the press release from Congressman Roy, click here.

DOL Announces Final Rule to Expand Access to Bonuses for Workers

The U.S. Department of Labor (DOL) held a background briefing regarding a final rule that allows employers to offer bonuses or other incentive-based pay to employees whose hours vary from week to week. Per the DOL, the final rule clarifies that payments in addition to the fixed salary are compatible with the use of the fluctuating workweek method under the Fair Labor Standards Act (FLSA).

To view the press release from the DOL, click here.

To view the rule, click here.

U.S. House May Consider PPP Reform Stand-alone Bill

Congressman Dean Phillips (D-MN) and Congressman Chip Roy (R-TX) introduced H.R. 6886, the Paycheck Protection Flexibility Act. The bipartisan bill will make necessary changes to the Paycheck Protection Program (PPP) as business owners nationwide have expressed concerns with the program.

The legislation will:

  • Allow forgiveness for expenses beyond the 8-week covered period.
  • Eliminate restrictions limiting non-payroll expenses to 25% of loan proceeds. 
  • Eliminate restrictions that limit loan terms to 2 years.  
  • Ensure full access to payroll tax deferment for businesses that take PPP loans.
  • Extend the rehiring deadline to offset the effect of enhanced Unemployment Insurance.  

To read the press release from Congressman Phillips, click here.

U.S. Senate Committee Holds Remote Hearing on CARES Act

U.S. Senate Committee on Banking, Housing, and Urban Affairs convened a remote hearing today entitled “The Quarterly CARES Act Report to Congress.” In his opening statement U.S. Department of Treasury Secretary Steven Mnuchin stated that the Department has “worked closely with the[U.S.] Small Business Administration [SBA] on the Paycheck Protection Program (PPP) to ensure the processing of more than 4.2 million loans for over $530 billion to keep tens of millions of hardworking Americans on the payroll.” Federal Reserve Chairman Jerome Powell added that in order “to bolster the effectiveness of the PPP, the Federal Reserve is supplying liquidity to lenders backed by their PPP loans to small businesses.”

Senators throughout the hearing asked similar questions regarding the PPP including loan size, underserved and rural communities, unemployment insurance, flexibility on the 75/25 rule, and loan forgiveness guidance.

U.S. Senator Jerry Moran (R-KS) and Senator Kyrsten Sinema (D-AZ) both asked Secretary Mnuchin about the loan forgiveness process within the PPP and if there would be further guidance administered regarding the process, noting that the lack of guidance has made it difficult for small business owners to plan. Secretary Mnuchin stated that he believed the guidance that was released last week deals with most of the major issues.

 

Witnesses:

  • The Honorable Steven T. Mnuchin, Secretary, U.S. Department of Treasury

 

  • The Honorable Jerome H. Powell, Chairman, Board of Governors of the Federal Reserve System

 

To view the hearing in its entirety, click here.

SBA PPP Repayment Deadline May 18

In a interim rule, the U.S. Small Business Administration (SBA) provided that any borrower who applied for a PPP loan and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification concerning the necessity of the loan request in good faith.

A FAQ Sheet produced by the U.S. Department of Treasury asks, “is it possible for a borrower to obtain an extension of the May 14, 2020 repayment date? For purposes of this safe harbor, a borrower must include its affiliates to the extent required under the interim final rule on affiliates, 85 FR 20817 (April 15, 2020). As of May 13, 2020”

Per the document, “SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor.”

To read the FAQ Sheet, click here.

Department of Treasury and SBA Release Loan Forgiveness Application

The U.S. Small Business Administration is working in conjunction with the U.S. Department of Treasury on the implementation of the Paycheck Protection Program (PPP). The PPP was established under H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, in response to the ongoing COVID-19 pandemic.

The SBA and Department of Treasury are continuously working to provide updated guidance for borrowers and lenders regarding the roll out of the program.

The U.S. Department of the Treasury and U.S. Small Business Administration released the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions for the application.  Click here to view the application and instructions.

House Committee on Small Business Holds Online Forum

The U.S. House Committee on Small Business held an online forum with Small Business Administration (SBA) lenders to discuss the Paycheck Protection Program (PPP) and future efforts. Throughout the online forum, similar sentiments were expressed from members of Congress and panelists praising the work done thus far from the U.S. Small Business Administration and U.S. Department of Treasury rapidly providing loans and guidance to small businesses nationwide considering the PPP is a new program.

However, panelists did discuss the issues and failures of the program thus far. Repeatedly mentioned was the lack of clarity and guidance for both borrowers and lenders regarding the forgiveness process. So far, the Department of Treasury and the SBA have issued guidance on a rolling basis, including 46 FAQ sheets and 9 interim rules, none of which include guidance on the forgiveness process. It was noted that borrowers are anxious with the lack of clarity on forgiveness and are hesitant to use loans they have received from the PPP. The Department of Treasury recently issued “Notice 2020-32, [which] provides that otherwise deductible business expenses are not deductible if the taxpayer is the recipient of a Paycheck Protection Program (PPP) loan that is subsequently forgiven,” effectively making PPP loans taxable. Members of Congress sent a letter to Treasury Secretary Steven Mnuchin stating that this notice goes against the intent of Congress when establishing the PPP.

Additionally, panelists agreed on the need for increased flexibility with PPP loans. Issued guidance states that 75% of the PPP loan must be used on payroll costs, while the other 25% can be used for rent, utilities, etc. Panelists noted that not all small businesses needed to spend 75% of the loan on payroll costs but did need to utilize larger parts of the loan for other costs.

Earlier this week, the U.S. House of Representatives Democratic leadership unveiled the COVID-19 fourth stimulus package. Included in the package are changes to the PPP as the pandemic continues to effectively impact small businesses nationwide.

Panelists:

  • Tony Wilkinson, President & CEO National Association of Government Guaranteed Lenders, Dallas, TX

 

  • Dafina Williams, Vice President of Public Policy Opportunity Finance Network, Washington, D.C.
  • Brett Palmer, President Small Business Investor Alliance, Washington, D.C.

 

  • D. Jay Hannah Executive Vice President of Financial Services BancFirst, Oklahoma, City, OK

 

To view the discussion, click here.

 

To read the letter sent to Treasury Secretary Mnuchin, click here. 

Treasury Dept. Updates PPP FAQ Sheet

The U.S. Small Business Administration is working in conjunction with the U.S. Department of Treasury on the implementation of the Paycheck Protection Program (PPP). The PPP was established under H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, in response to the ongoing COVID-19 pandemic.

The SBA and Department of Treasury are continuously working to provide updated guidance for borrowers and lenders regarding the roll out of the program.

The Department of Treasury issued an updated PPP FAQ Sheet.

To read the updated PPP FAQ Sheet, click here.

 

 

House Democratic Leadership Releases COVID-19 Fourth Stimulus Package

The U.S. House of Representatives Democratic leadership unveiled the COVID-19 fourth stimulus package. The House is expecting to vote on the package on Friday.

The bill also makes changes to the Paycheck Protection Program (PPP), including expansions to the types of organizations that are eligible for the loans, specifically allowing 501(c)(6) business trade associations to apply for the PPP.

The House Committee on Small Business distributed a summary of the changes to the program.

To read the highlighted summary, click here.

 

To read the FAQ Sheet, click here.

 

To read the summary of changes to the PPP, click here.

 

To read the full bill text, click here.

Automotive Aftermarket Associations Urge Congressional Leaders to Oppose Cash for Clunkers Program

Major automotive aftermarket associations, including the Auto Care Association, Tire Industry Association and Service Station Dealers of American and Allied Trades, the Automotive Oil Change Association, and the Automotive Service Association, sent a letter to Congressional leaders in opposition of a new “Cash for Clunkers” type program from being included in the next COVID-19 stimulus legislation.

The Obama Administration implemented the Consumer Assistance Recycles and Save (CARS) program, or Cash for Clunkers, as a response to the 2008 recession. The goals of the program were to reinvigorate the automotive industry, improve fuel efficiency and cut carbon dioxide emissions.

Recently, at least two auto manufacturers have floated the idea of a “Cash for Clunkers” program to be included in the next COVID-19 stimulus legislation in order to boost vehicle sales.

To read the letter, click here.

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