May 21, 2020
WASHINGTON, D.C. — Today, U.S. Senators Angus King (I-Maine) and Steve Daines (R-Mont.) introduced the Paycheck Protection Flexibility Act, a bipartisan bill that would make necessary changes to the Paycheck Protection Program (PPP). The legislation would adjust PPP rules which have prevented some businesses from fully utilizing the funds to address the severe economic impacts of the coronavirus pandemic. Most significantly, the legislation would extend loans over a longer period of time and allow for some flexibility in where the funds can go – as many small businesses face high commercial rent rates for their retail spaces. In addition to Senators King and Daines, Senators Tim Kaine (D-Va.), Thom Tillis (R-N.C.), Debbie Stabenow (D-Mich.), and Cory Gardner (R-Colo.), are original cosponsors of the legislation. Companion legislation has been introduced in the House of Representatives by Reps. Dean Phillips (D-Minn.) and Chip Roy (R-Tex.).
“As the economic impacts of coronavirus continue to grow, we need to adjust and improve our response to meet the magnitude of this crisis,” said Senator King. “The Paycheck Protection Program has been a help to many businesses, but several of the program’s requirements prevent business owners from addressing their most pressing needs. If we want to help small businesses in Maine and across the country weather this storm and come out the other side, we need to give them the flexibility to address their specific challenges. This bipartisan legislation will build on the good and help keep local institutions alive during this pandemic – Congress should pass this legislation, quickly.”
"The coronavirus pandemic has created unprecedented challenges for Maine's business community,” said Dana Connors, President of the Maine Chamber of Commerce. “The Paycheck Protection Program has been a lifeline for over 26,000 Maine businesses and Senator King's proposal will help ensure these businesses can fully take advantage of the program's original intent. The Maine Chamber is grateful to Senator King and his colleagues for their continued bipartisan efforts to make this program work for Maine businesses."
“This pandemic has hit us particularly hard as a restaurant that was thriving,” said James Hatch, co-owner of Home Kitchen Cafe in Rockland. “Extending the PPP loan to up to 24 weeks will make a tremendous difference for our business, as we will not be anywhere near full strength by June 30, 2020. Our servers, always in contact with customers old and new, don’t feel safe to resume their usual tasks until there is adequate testing and or a vaccine. As a business owner, it is incredibly important to end this pandemic with no loan from our PPP grant, and this proposal from Senator King will help our business and others like it accomplish that goal.”
“The Covid-19 pandemic has had a profound impact on Mast Landing Brewing Company's sales across the country as well as on our partners who we rely on to sell our goods to retailers and consumers and consumers alike,” said Kevin McGlynn, Director of Sales at Mast Landing Brewing Company in Westbrook. “It is imperative that PPP is adapted to fit the needs of breweries, restaurants, distributors, and bars as well as other small businesses so we can keep the great people we employ working through this pandemic. Small businesses are the backbone of the US economy and we desperately need the PPP to be more flexible for businesses like ours as well as all other small businesses participating in this program so we can make the best use of these funds for our businesses. We would like to thank Senator King and his team for listening to, and working on behalf of small businesses in Maine and across the nation to adapt the PPP to give us a chance to survive what is undoubtedly the most challenging economic hurdle we have faced in generations.”
"Too many small businesses are in limbo, fearful that provisions in the Paycheck Protection Program will add burdens instead of relieving them," said Chris Slevin, Vice President of the Economic Innovation Group. "The Paycheck Protection Flexibility Act proposes timely, practical improvements that will allow more businesses to utilize PPP to weather this period of uncertainty. We applaud Senators King and Daines, along with Representatives Phillips and Roy, for their leadership and urge Congress to act quickly on these reforms."
Specifically, the Paycheck Protection Program Flexibility Act legislation will:
1. Allow forgiveness for expenses beyond the 8-week covered period. The 8-week timeline does not work for local businesses that are prohibited from opening their doors, or those that will only be allowed to open with restrictions. Businesses need the flexibility to spread the loan proceeds over the full course of the crisis until demand returns. Otherwise, employees will simply be furloughed at the expiration of the 8 weeks. This provision will allow the businesses to choose between using their loans in the initial 8 weeks or extending the period for up to 24 weeks.
2. Eliminate restrictions limiting non-payroll expenses to 25% of loan proceeds. In order to survive, businesses must pay fixed costs. The PPP loans require that 75% of the loan go to payroll. For many businesses, payroll simply does not represent 75% of their monthly expenses and 25% does not leave enough to cover mortgage, rent, and utilities. Retaining employees is not possible if a business cannot retain their physical location
3. Eliminate restrictions that limit loan terms to 2 years. According to the American Hotel and Lodging Association, full recovery for that industry following both the September 11, 2001 terrorist attacks and the 2008 recession took more than two full years. This is the same for many other industries. If the past is any indication of the future, it will take many businesses more than two years to achieve sufficient revenue to pay back the loan.
4. Ensure full access to payroll tax deferment for businesses that take PPP loans. The purpose of PPP and the payroll tax deferment was to provide businesses with capital to weather the crisis. Receiving both should not be considered double-dipping. Businesses need access to both sources of cash flow to survive.
5. Extend the rehiring deadline to offset the effect of enhanced Unemployment Insurance. To receive loan forgiveness under PPP, a business must rehire employees by a deadline of June 30, 2020. However, the enhanced Unemployment Insurance created through the CARES Act is higher than the median wage in 44 states. Many businesses have reported an inability to rehire employees because they are making more on Unemployment than they made working. To mitigate this unintended consequence, the deadline to rehire employees under PPP should be extended to align with the expiration of enhanced Unemployment Insurance.
6. Adjusts program’s standards to account for economic realities following the coronavirus pandemic. If economic conditions prevent businesses from reaching pre-coronavirus revenue levels and businesses aren’t able to rehire all employees, this legislation would make sure businesses are still able to receive loan forgiveness.
The Paycheck Protection Program Flexibility Act is supported by the International Franchise Association, American Hotel and Lodging Association, National Federation of Independent Business, National Restaurant Association, US Travel Association, Small Business Majority, U.S. Hispanic Chamber of Commerce, National Small Business Association, National Association for the Self-Employed, Small Business and Entrepreneurship Council, and Economic Innovation Group.