The House next week is planning to overhaul the government’s flagship small business aid program, amid growing concern that it’s become unworkable for many employers.
House leaders have agreed to hold a vote on bipartisan legislation to ease restrictions on how businesses use so-called Paycheck Protection Program loans, which can be forgiven if employers agree to maintain their payroll and avert layoffs during the coronavirus pandemic.
It’s a notable shift in strategy for Speaker Nancy Pelosi (D-Calif.), who has until now focused her efforts on more comprehensive coronavirus legislation, including the $3 trillion rescue package the House passed Friday. And it could reduce the sense of urgency some in Congress have to pass another big relief measure.
But complaints about the government loan program have become too big of a political problem to be ignored, according to lawmakers and aides, with members of both parties in the House and Senate pushing for changes in recent days.
“In this case we were hearing the exact same thing from all of the small businesses in our districts,” Rep. Dean Phillips (D-Minn.) said about working with conservative GOP Rep. Chip Roy of Texas to draft the bill. “We were perfectly aligned and we both recognized that to move legislation under these circumstances there has to be bipartisan genesis.”
The legislation that the House is planning to take up next week would give businesses more flexibility in how they use the $670 billion Paycheck Protection Program and still have their loans forgiven. The request has become an urgent demand from restaurants and other industries as shutdown orders nationwide have persisted longer than lawmakers first expected when they created the program in March. Business owners fear they will be stuck with the debt if changes aren’t made, and it’s made some employers skittish about using the money.
But the promise of a vote came during an urgent whip operation as Pelosi worked to corral support for her latest coronavirus aid package last week. Pelosi and her leadership team were working against tight margins — most Republicans had promised to oppose the aid package and both progressive and moderate Democrats had balked at the legislation for different reasons.
Pelosi buttonholed Phillips last Friday, talking to him for 25 minutes as she worked to whip support for the stimulus bill. Pelosi promised the Minnesota Democrat a vote on his legislation with Roy. The House will also vote on another Phillips bill requiring the Small Business Administration to disclose recipients of grants and loans funded under coronavirus relief legislation.
Phillips, previously undecided on the aid package, which Pelosi dubbed “the Heroes Act,” switched his vote to “yes.”
“I expressed to her there are elements, some of which are included in the Heroes Act, that I thought didn’t have the luxury of time and negotiation, particularly the fixes to the PPP program, which small businesses have been describing to me for many, many weeks,” Phillips said.
“I was impassioned and she listened and not only did she not object, she thought it was a very reasonable request and one that it appears will receive a vote on the House floor next week,” he added.
Some Democrats have privately questioned whether this move opens up the door to Pelosi shifting strategies completely and putting bills that address narrower coronavirus-related issues on the floor — as opposed to the massive aid packages seen so far — an idea Rep. Peter Welch (D-Vt.) suggested in a private caucus call Monday.
But senior Democratic aides dismissed the idea that pushing through the bipartisan small business bill could drain their leverage and discourage Republicans from negotiating a much larger coronavirus relief package.
While the bill makes necessary tweaks to the small business program, the aides argued, there are still major issues that must be resolved in the coming weeks, including how to prop up struggling local and state governments and whether to extend popular unemployment benefits beyond July.
Still, the move by the House is the latest evidence that the outlook for the economy has worsened since Congress passed a $2 trillion rescue package two months ago and that lawmakers are facing a new sense of urgency in how to keep Americans afloat.
It also reflects a sense of restlessness among rank-and-file lawmakers who have been largely left out of earlier negotiations over more sweeping legislation to respond to the crisis.
“These provisions are not political,” said Roy, who drafted the small business loan changes with Phillips. “These provisions are generally well-accepted, generally bipartisan, generally desired by small businesses across the entire country.”
The bill from Phillips and Roy would address many of the complaints from businesses about the implementation of the Paycheck Protection Program.
The loans have proven to be hugely popular in large part because they can be forgiven — a key tradeoff for businesses to take on the debt and keep workers paid. As of Saturday, the Small Business Administration had approved $513.3 billion in funds via 4.3 million loans since the program’s April 3 launch. It appears that more than $100 billion remains available for loan approvals.
But there has been a growing consensus in recent weeks that the rules the Trump administration set for the loans may be too limiting for many businesses, including those that still face restrictions in being able to reopen.
The bill the House will take up next week would give businesses more flexibility in how they spend the money while still being able to have the loans forgiven. The legislation would give businesses 24 weeks to spend the money instead of eight. It would also eliminate a requirement imposed by the Trump administration that forced businesses to spend at least 75 percent of the funds on payroll if they want the full amount of the loans to be forgiven.
The ideas have attracted wide support but it was unclear in recent days who in Washington would act first to make the changes.
Treasury Secretary Steven Mnuchin has resisted doing it on his own, arguing that he needed intervention by Congress — an assertion that many lawmakers have disputed. And until this week, it was unclear if Congress would be hamstrung because of a stalemate between Senate Republicans and House Democrats over broader economic relief legislation.
“The key thing is for everybody to get a signal of what’s going to happen,” said Erik Asgeirsson, president and CEO of CPA.com. “Once you do that, then people can start making better decisions on it.”
The effort got another boost Monday when President Donald Trump signaled he was open to easing the loan rules. He made the comments at a meeting with restaurant industry representatives who urged the president to give them more leeway in how to use the money.
“That should be easy,” Trump said. “That’s like one of the easiest requests I’ve ever heard.”
Senate Minority Leader Mitch McConnell (R-Ky.) has not announced specific action on standalone Paycheck Protection Program legislation. But there is clear bipartisan support in the Senate as well. Senate Small Business Chairman Marco Rubio (R-Fla.) and ranking member Ben Cardin (D-Md.) are among those who have talked about making revisions.
“I would hope we would try to do it unanimously this week, but I’m not sure if people will only agree to that,” Rubio told reporters Tuesday. “I think the bigger challenge is somebody will see that and try to put something else on it. And the thing they try to add to it might not be as uncontroversial.”
Sen. John Thune (R-S.D.) said Tuesday that he didn’t expect Senate action before the Memorial Day recess but “after, yes, I think there could be some changes.”
Burgess Everett contributed to this report.