A measure that would make it easier for small businesses (SMBs) to get their hands on a forgivable federal loan has easily passed the House, The Wall Street Journal reported.
The bipartisan bill answers a request from entrepreneurs who asked lawmakers to reduce the amount of the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) loan that must be used on payroll to 60 percent, down from 75 percent.
A second change gives borrowers up to six months to use the funds, up from the two months established in the initial bill that was passed in March. It also extends the deadline to rehire workers to Dec. 31.
SMBs have said the original PPP legislation, which required most of the loan to be used for payroll, didn’t make sense, as many needed money for rent and other expenses brought on by COVID-19. The initial eight-week time limit for use of the funds doesn’t work for many owners who have been issued shutdown orders.
The Senate could act on the proposal as early as next week.
The changes in the PPP represent one of the few areas of cooperation on Capitol Hill, the WSJ reported, amid a chasm over the future of state assistance, unemployment benefits and liability protections.
“We believe what we’ve compromised on here, in this chamber, will be sufficient to pass the Senate,” U.S Rep. Dean Phillips (D- Minnesota), a lead sponsor of the bill, told the news service. “This is what small businesses need, and if we don’t keep the businesses open, the jobs go away.”
At the same time, federal agencies said they would set aside $10 billion of the remaining PPP funds for community lenders, the WSJ reported. Under the plan, $670 billion will be set aside for loans made through community development financial institutions (CDFIs), according to the SBA and the U.S. Treasury Department. The mission of CDFIs is to lend to low-income borrowers and other groups that are often underserved by traditional lenders.
“We have received bipartisan support for dedicating these funds for CDFIs to ensure that traditionally underserved communities have every opportunity to emerge from the pandemic stronger than before,” Treasury Secretary Steven Mnuchin said in a statement.