WASHINGTON – Today, the House Committee on Small Business Ranking Member Steve Chabot (R-OH) spoke on the House floor in support of the Paycheck Protection Program Flexibility Act.
Remarks as prepared for delivery:
Mister/Madam Speaker, I yield myself such time as I may consume. I rise in support of H.R. 7010, the “Paycheck Protection Program Flexibility Act,” as amended.
Before I speak on our first bill, I would again like to thank Chairwoman Velázquez for conducting this process in such a bipartisan manner.
It is more important than ever to maintain our strong bilateral negotiations as we continue to combat the spread of COVID-19 and its devastating effect on our economy, and specifically, our small business economy. I thank you for the collaboration and the good will.
Over the past 3 months I have been in contact with literally thousands of small business not only in my hometown of Cincinnati, but across the country. I have joined dozens of constituent calls with my Congressional colleagues from Washington State to Florida and just about everywhere in between.
There has been broad consensus during those meetings that the PPP program has done exactly what it was intended to do: to serve as a lifeline for small businesses and their employees who have been shut down through no fault of their own. By and large, it would be hard to argue against the fact that the PPP program has been a resounding success. Over 4 million small businesses have received a PPP loan to keep their operations moving forward during the pandemic.
That said, there have been some bumps in the road and some unintended consequences that happen when you do six months of legislative work in six days. That is why we are here today—to smooth some of those bumps and fix some of the unintended consequences.
For example, when we crafted the original CARES Act in March of this year, the covered period was defined as 8-weeks. The emergency period has been a moving target. This bill begins to address this. To fix the miscalculation in how long this pandemic has lasted from the original CARES legislation, this bill extends the 8-week covered period to 24 weeks and creates an opt-out to allow businesses that want to stay within the original 8-week window to remain there. This promotes greater flexibility for small firms to decide when it is best to start spending their PPP loan.
It is important to remember that this change isn’t as simple as moving a few dates around. There are a lot of unintended consequences that we need to account for because more than 4 million loans have already gone through the program for a half a trillion dollars.
First, the original CARES Act allowed principal, interest, and fees to be deferred for between 6 and 12 months. The administration limited this deferment period to 6 months through guidance.
This deferment time period would need to be shifted to ensure a business knows its loan forgiveness amount before its deferment period concludes. This bill accomplishes this by extending the deferment window to end once the SBA makes the forgiveness payment to the lender on the borrower’s behalf.
Second, the bill eliminates the 75/25 rule which was inserted into the PPP by the Administration through guidance to require 75 percent of the loan to be used on payroll costs and 25 percent to be used on mortgage interest, rent, and utilities. The bill replaces this rule with a 60/40 split to again give small businesses greater flexibility as to how to best utilize their PPP funds.
Third, the bill extends the 2-year maturity of the loan to a 5-year maturity for new loans to help small businesses struggling to make their payments in a weakened economy. The bill also provides that loans already processed remain at a 2-year maturity so there is no retroactivity for this provision.
The bill also codifies the rehire flexibility provision that states that as long as a good faith offer is offered to a recently laid off worker, the business will satisfy forgiveness requirements and the salaries and wages test. This safe harbor provision provides a solution to the extra $600 in federal unemployment payments employers are facing trying to entice their workers back.
Finally, the bill establishes a new safe harbor to account for businesses that are required by civil authority to open only at 50% capacity. This ensures that businesses that have no choice but to run at half capacity are not left behind their counterparts that have the ability to operate fully.
Mister/Madam Speaker, I urge my colleagues to support this much needed bipartisan bill that provides real solutions to American small businesses facing this very difficult situation. I reserve the balance of my time.