Paycheck Protection Program Flexibility Act of 2020
Floor Speech
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Ms. VELAZQUEZ. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 7010) to amend the Small Business Act and the CARES Act to modify certain provisions related to the forgiveness of loans under the paycheck protection program, to allow recipients of loan forgiveness under the paycheck protection program to defer payroll taxes, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 7010
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.
This Act may be cited as the ``Paycheck Protection Program Flexibility Act of 2020''. SEC. 2. MATURITY FOR LOANS WITH REMAINING BALANCE AFTER APPLICATION OF FORGIVENESS.
(a) In General.--Section 7(a)(36)(K)(ii) of the Small Business Act (15 U.S.C. 636(a)(36)) is amended by inserting ``minimum maturity of 5 years and a'' before ``maximum maturity''.
(b) Effective Date; Applicability.--The amendment made by this section shall take effect on the date of the enactment of this Act and shall apply to any loan made pursuant to section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)) on or after such date. Nothing in this Act, the CARES Act (Public Law 116-136), or the Paycheck Protection Program and Health Care Enhancement Act (Public Law 116-139) shall be construed to prohibit lenders and borrowers from mutually agreeing to modify the maturity terms of a covered loan described in subparagraph (K) of such section to conform with requirements of this section. SEC. 3. AMENDMENTS TO PAYCHECK PROTECTION PROGRAM LOAN FORGIVENESS.
(a) Extension of Covered Period.--Section 7(a)(36)(A)(iii) of the Small Business Act (15 U.S.C. 636(a)(36)(A)(iii)) is amended by striking ``June 30, 2020'' and inserting ``December 31, 2020''.
(b) Forgiveness.--Section 1106 of the CARES Act (Public Law 116-136) is amended--
(1) in subsection (a), by striking paragraph (3) and inserting the following:
``(3) the term `covered period' means, subject to subsection (l), the period beginning on the date of the origination of a covered loan and ending the earlier of--
``(A) the date that is 24 weeks after such date of origination; or
``(B) December 31, 2020;'';
(2) in subsection (d)--
(A) in paragraph (5)(B), by striking ``June 30, 2020'' each place it appears and inserting ``December 31, 2020''; and
(B) by adding at the end the following new paragraphs:
``(7) Exemption based on employee availability.--During the period beginning on February 15, 2020, and ending on December 31, 2020, the amount of loan forgiveness under this section shall be determined without regard to a proportional reduction in the number of full-time equivalent employees if an eligible recipient, in good faith--
``(A) is able to document--
``(i) an inability to rehire individuals who were employees of the eligible recipient on February 15, 2020; and
``(ii) an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020; or
``(B) is able to document an inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration during the period beginning on March 1, 2020, and ending December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.
``(8) Limitation on forgiveness.--To receive loan forgiveness under this section, an eligible recipient shall use at least 60 percent of the covered loan amount for payroll costs, and may use up to 40 percent of such amount for any payment of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation), any payment on any covered rent obligation, or any covered utility payment.''; and
(3) by adding at the end the following new subsection:
``(l) Application to Certain Eligible Recipients.--An eligible recipient that received a covered loan before the date of enactment of this subsection may elect for the covered period applicable to such covered loan to end on the date that is 8 weeks after the date of the origination of such covered loan.''.
(c) Extension of Deferral Period.--Section 7(a)(36)(M) of the Small Business Act (15 U.S.C. 636(a)(36)(M)) is amended--
(1) in clause (ii)(II), by striking ``for a period of not less than 6 months, including payment of principal, interest, and fees, and not more than 1 year.'' and inserting the following: ``, including payment of principal, interest, and fees, until the date on which the amount of forgiveness determined under section 1106 of the CARES Act is remitted to the lender.'';
(2) in clause (iii), by striking ``for a period of not less than 6 months, including payment of principal, interest, and fees, and not more than 1 year.'' and inserting the following: ``, including payment of principal, interest, and fees, until the date on which the amount of forgiveness determined under section 1106 of the CARES Act is remitted to the lender.''; and
(3) by adding at the end the following new clause:
``(v) Rule of construction.--If an eligible recipient fails to apply for forgiveness of a covered loan within 10 months after the last day of the covered period defined in section 1106(a) of the CARES Act, such eligible recipient shall make payments of principal, interest, and fees on such covered loan beginning on the day that is not earlier than the date that is 10 months after the last day of such covered period.''.
(d) Effective Date; Applicability.--The amendments made by this section shall be effective as if included in the CARES Act (Public Law 116-136) and shall apply to any loan made pursuant to section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)) or section 1109 of the CARES Act. SEC. 4. DELAY OF PAYMENT OF EMPLOYER PAYROLL TAXES.
(a) In General.--Section 2302(a) of the CARES Act (Public Law 116-136) is amended by striking paragraph (3).
(b) Effective Date; Applicability.--The amendments made by this section shall be effective as if included in the CARES Act (Public Law 116-136) and shall apply to any loan made pursuant to section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)) or section 1109 of the CARES Act. SEC. 5. EMERGENCY DESIGNATION.
(a) In General.--This Act is designated as an emergency requirement pursuant to section 4(g) of the Statutory Pay-As- You-Go Act of 2010 (2 U.S.C. 933(g)).
(b) Designation in Senate.--In the Senate, this Act is designated as an emergency requirement pursuant to section 4112(a) of H. Con. Res. 71 (115th Congress), the concurrent resolution on the budget for fiscal year 2018.
I rise in support of the bipartisan bill before us today, H.R. 7010, the Paycheck Protection Program Flexibility Act of 2020.
We all knew the rollout of the Paycheck Protection Program was going to be rocky, given the size of the program and the speed with which it was stood up.
We are thankful for the staff at SBA for their hard work assisting small businesses during this dire time. This is, undoubtedly, the most enormous undertaking the agency has ever performed. They have done so under difficult circumstances and remarkably quickly.
With that said, my colleagues and I have been hearing from Main Street small businesses that they need changes to make the program work for them.
I think we can all agree the economic crisis brought on by COVID-19 has proven more severe and drawn out than many anticipated. In some cases, State and local governments have extended shutdowns and stay-at- home orders. Many localities are only now allowing small businesses to reopen, very gradually, in phases.
In other instances, small business owners have reported concerns that the economy will not fully recover until there is an affordable, widely accessible COVID-19 vaccine.
Regardless, the extended nature of the economic downturn has made it necessary to enact certain legislative reforms to the program.
First, we need to give borrowers more than 8 weeks to use the funds in order to qualify for loan forgiveness. Borrowers who took out PPP loans early in the program are about to reach the end of their 8-week period governing forgiveness. However, millions of small businesses across the Nation are still facing forced closures.
Those that are reopening are required to do so in an extremely limited manner, with only outdoor dining or curbside-only pickup at retail stores. Those restrictions mean small businesses continue to have a tough road ahead, and they need flexibility in how they use this emergency capital. This provision will give them that.
The bill triples the current 8-week period in which businesses must use funds to be eligible for forgiveness to 24 weeks. That will help ensure businesses have more room to breathe, even in places where reopening of the economy happens more slowly.
Second, we must extend the program through the end of the year. The unpredictable spread of the virus, shortage of widespread testing, and lack of a vaccine mean that we do not know exactly when the small business sector will fully reopen and, when it does, how the ``new normal'' will look.
The bill addresses a challenge that was created when the first set of guidelines were issued. We have heard you loud and clear. Today's legislation strikes a balance between protecting workers by guaranteeing loans are used for payroll, with the need to recognize that many independent restaurants face difficulty paying rent and utilities.
The new 60/40 ratio makes certain a business can remain open, weather the crisis, continue employing workers, and keep serving their local communities. Congress must revamp this program to make it more accessible for small employers to weather the uncertainty ahead.
We simply do not know if there will be another wave of infections or additional lockdowns. This bill provides certainty to employers afraid to use their loan proceeds or reluctant to apply to the program by providing much-needed flexibility.
I applaud my colleagues, Mr. Phillips and Mr. Roy, for working together in a bipartisan manner to craft commonsense solutions for America's small businesses. I thank Ranking Member Chabot for his assistance in crafting this bipartisan measure.
I urge all my colleagues to vote ``yes,'' and I reserve the balance of my time.
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Ms. VELAZQUEZ. Mr. Speaker, I would like to inquire of the Chair how much time is remaining on each side.
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Ms. VELAZQUEZ. Jackson Lee).
Ms. JACKSON LEE. Mr. Speaker, I thank the chairwoman for her leadership with the ranking member, Mr. Phillips and Mr. Roy.
Mr. Speaker, I stand in strong support because 100,000 people are dead. Small businesses are living in the midst of those communities of devastation, but they are trying to keep their doors open so they can help their fellow citizens.
I am grateful that we will allow an extended period of time, 24 weeks, for allowing for forgiveness. I am very grateful we have extended the date, for extending the program to December 31, and, of course, the payment, the loan period to 5 years.
I know the mom-and-pop barbershops and cosmetology shops and nail shops and restaurants; they are crying out to survive. Some of their very workers have died. They are taking care of families. And so to ensure the full access to payroll tax deferment for business tax, that takes PPP loans.
In addition, I support the TRUTH Act because the money that we give must be used right, and transparency on who gets the loans is important.
Mr. Speaker, this further relief for small businesses is well placed because they are the anchor of the economy.
I say to Houston small businesses: We are coming to help you. We will be speaking to you this week.
Mr. Speaker, I support this bill, and we should move this forward as quickly as possible. They are the anchor of the economy of this Nation.
Mr. Speaker, I continuously hear from small businesses across the country about the uncertainty they are facing and when they will be able to fully reopen. In the face of that uncertainty, small businesses need flexibility with these loans.
This bill takes an important step in providing that flexibility and making the Paycheck Protection Program work better for the millions of small businesses across the country that are trying to weather this storm. And since we do not know how long this storm will last, we must ensure small businesses are able to take advantage of the program through the end of the calendar year and to use the loan over the course of 24 weeks. This program is now a stronger onramp to full employment for small employers to weather this unprecedented economic and public health crisis.
I commend the Committee on Small Business staff on both sides of the aisle for their dedication and hard work over these last few months. I thank them for their commitment to our Nation's small employers and their workers.
And I thank the ranking member, because we have always, throughout the history of the committee, worked in a bipartisan manner. I always say, when we deal with small business issues, there is no Democratic or Republican approach. Those are American issues, particularly as they relate to our economy.
Mr. Speaker, in that vein, I also thank the gentleman from Texas (Mr. Roy) and the gentleman from Minnesota (Mr. Phillips) for the great work that they did and for the bipartisan spirit in which they brought this bill to the floor.
Mr. Speaker, I strongly urge a vote in support of the legislation, and I yield back the balance of my time.
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Ms. VELAZQUEZ. Mr. Speaker, on that I demand the yeas and nays.
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