On Wednesday evening, the U.S. Senate approved the House-passed Paycheck Protection Program reform bill in a voice vote, clearing it for presidential approval. The update gives business owners more flexibility and time to use emergency loan money and still have the debt forgiven.
“We can't wait any longer. Businesses are really suffering for lack of these changes,” Senate Minority Leader Chuck Schumer (D-N.Y.) said earlier in the day on the Senate floor, according to CNN. “We must get this done. Businesses are going under every day.”
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The measure gives employers 24 weeks to spend the loan money (up from eight weeks) and still have the loans forgiven. An earlier version of the bill would have eliminated any requirement about how much companies must spend on payroll, but the final text reduces the percentage from 75 to 60.
The approval came nearly a week after the U.S. House of Representatives overwhelmingly approved bipartisan legislation sponsored by Rep. Dean Phillips (D-Minn.) and Rep. Chip Roy (R-Texas) that would relax the terms of the program. The vote in the House was 417-1, with Rep. Thomas Massie (R-Ky.) as the one dissenting vote. The Senate vote was unanimous after Sen. Ron Johnson (R-Wis.) withdrew an objection, reportedly expressing concern that the bill's language could prevent any loan forgiveness at all for businesses that spend up to 59.9 percent on payroll rather than allowing proportional forgiveness. Johnson and Sen. Mike Lee (R-Utah), also wanted to see the loan program end applications in August instead of in December, arguing that the emergency initiative was meant to be a stopgap solution limited to the pandemic. When the House passed the bill last week, American Hotel & Lodging Association President and CEO Chip Rogers expressed doubts that the program would need to go beyond December. “I don't know that we would need an extension beyond the end of the year,” he said at the time.
The Industry Responds
“America’s hoteliers applaud the House and Senate for passing the Payroll Protection Flexibility Act,” said AAHOA President and CEO Cecil P. Staton in a statement. “This legislation will ensure that vital corrections are made to the Paycheck Protection Program, which will provide hoteliers with more options to keep the lights on and come out on the other side of this crisis. We are pleased that several of the recommendations for which we advocated are included in this bill, including the extension of the covered period for using PPP loans through the end of 2020 and allowing borrowers to use more loan proceeds to cover a greater percentage of operating costs. Making these changes effective retroactively, as if they were included in the original [Coronavirus Aid, Relief and Economic Security] Act, will help small businesses significantly as they work to remain open, keep workers on payroll, and emerge from this crisis as our society reopens. We urge President Trump to sign this bill into law.”
Tori Emerson Barnes, U.S. Travel Association EVP of public affairs and policy, expressed similar sentiments in her own statement. “The PPP changes passed by both chambers are another important step in providing relief to small businesses that otherwise will not survive until the economic recovery phase,” she said. “The modification to the portion of funds that can be used for non-payroll expenses is especially crucial to travel-related small businesses, which have comparatively high capital overhead but virtually zero incoming revenue because of the necessary measures in place to stem the spread of the pandemic.
“While this measure does a good job making the PPP work better for businesses that are eligible, other PPP enhancements will be needed to make sure all the key pieces are in place when the recovery begins—in particular, extending eligibility to nonprofit and quasi-governmental entities that are vital drivers of local and regional economic development. Like the businesses they serve, the finances of these nonprofits have been devastated by the standstill in travel and tourism, and the moment of recovery will be moot unless they can keep their lights on to take advantage of the return in travel demand."
Emerson Barnes encouraged leaders to focus on the next necessary steps: “We urge leaders to move urgently to enact the next phase of coronavirus response legislation, which is absolutely vital to the future of the travel and tourism industry, and to prioritize expanding eligibility to those most hard hit by this pandemic such as destination marketing organizations.”