The United States House of Representatives has voted to pass significant changes to its PPP scheme. But while some say the changes don’t go far enough, others claim they go too far.
When the government announced its Paycheck Protection Program, a $669-billion business loan program established by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), it became quickly apparent to most restaurant owners that the scheme was fundamentally flawed.
The loans, which could be partially or fully forgiven, had to be spent within an 8-week window, and 75% of them had to go to employee payroll. The problem was that 8-weeks was an unrealistic timeframe considering most restaurants wouldn’t even be open by that time, and those that were would be operating at reduced capacity.
Restaurants and hospitality leaders united, and groups like the Independent Restaurant Coalition lobbied government to #FIXPPP as one of their key demands to #saverestaurants. Weeks of co-ordinated action and lobbying have seemingly borne fruit as the House of Representatives has voted to pass an amendment to the PPP.
Under the House bill, the original eight-week deadline would be extended to 24 weeks, and the June 30th rehiring deadline would be pushed back to December 31st.
The requirement that 75% of the loan needs to be spent on payroll would be reduced to 60%. Employers would be given more leeway on loan forgiveness if they can show they couldn’t rehire staff in a way that complies with safety standards. The loan limit would also be extended from two years to five years.
And employers would be given more leeway on loan forgiveness if they can show they were unable to rehire people or reopen to business in a way that complies with safety standards.
The bill will now pass to the Senate, and while the bill was passed overwhelmingly in the House, there are no guarantees that it will pass in its current form, as Republicans may attempt to reshape it closer to their own legislation.
The Washington Post reports that “The bill [Marco Rubio] is pushing in the Senate extends the rehiring deadline for 16 weeks instead of 24. His office highlighted several objections to the House bill, including the provision that would make it easier for businesses to get loan forgiveness even without rehiring workers. Rubio had hoped to pass his legislation last week in the Senate, and it is unclear what the timeline might be for reaching a compromise.”
The Independent Restaurant Coalition, however, sees this as a step forward and is confident both sides are on board.
“The passage of the bipartisan Paycheck Protection Program Flexibility Act is a sign that both parties agree that the Paycheck Protection Program can work better for independent restaurants,” they said in a statement.
However, #FIXPPP is only one of their objectives, and they will continue to lobby for action to save the future of the hospitality industry.
“Even if these changes to the PPP become law, independent restaurants face nearly insurmountable odds to staying open over the next year as they face increasing costs and are forced to operate with reduced seating. And given that only 7.8% of small businesses across the country have been approved for PPP funding, a lot more needs to be done,” they added.