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Proposed PPP Loan Expansions Could Throw Small Merchants a Lifeline

Hearing calls from businesses across the country, the Senate is considering fixes to the Paycheck Protection Program (PPP) that would give loan holders more time to spend the money they receive.

The provisions of the current bill stipulate that businesses have just eight weeks to spend their loan money on payroll, rent and mortgage interest, or utilities, in order for it to be forgiven by the Small Business Administration (SBA).

Businesses with fewer than 500 employees can apply for PPP loans—which cover up to 2.5 times their monthly payroll—through participating banks and lenders. In recent weeks, companies that have received loans have voiced concerns that the eight-week spending period is too tight, calling for greater more autonomy in deciding how the funds are allocated.

Hearing rumblings in recent days that the Senate was considering passing legislation that would address these issues, the National Retail Federation (NRF) released an open letter on Thursday praising lawmakers.

The provisions would be expanded to allow businesses to spend PPP loan money on safety equipment and improvements to their businesses, like the installation of plexiglass sneeze guards or drive-through windows. Most important, the new Senate bill would give businesses 16 weeks—double the amount of time first stipulated—to spend the funds and still have their loans forgiven.

NRF lauded Congress’ recognition of the program’s current limitations, and the need for more flexibility, said senior vice president for government relations David French.

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“Retailers want to reopen as quickly as they can, but the No. 1 priority is to reopen safely,” he said. “This measure will allow retailers to take the time to make sure their stores are safe for their workers and customers, and allow them to invest in equipment and modifications important to ensuring safety.”

The bipartisan legislation is being led by the Senate Small Business Committee, which counts as members chairman Marco Rubio (R-Fla.), ranking member Ben Cardin (D-Md.), committee member Jeanne Shaheen (D-N.H.), and Senator Susan Collins, (R-Maine).

According to The Hill, Senate leaders began to “hotline” the legislation on Thursday, enacting a procedural tactic that would quickly pass the bill if no senator objected. The Senate ultimately adjourned for the Memorial Day holiday without passing the legislation.

The House is expected to vote next week on separate legislation that would give businesses up to 24 weeks to use the funds, and repeal a requirement that they spend at least 75 percent of the money on payroll.

NRF’s French opined that either bill would benefit small retailers, giving them more time to implement new processes for safe reopening. The trade group’s Operation Open Doors initiative provides guidelines for retailers regarding health and safety, people and personnel, logistics and supply chain, and litigation and liability, he said.

In a May 6 memo, NRF implored legislators to consider expanding the provisions of the PPP “to cover the worst months of the economic slowdown.”

Currently, the program is set to expire on June 30. “It’s clear that extended public health restrictions and a slow return to normal work, public gathering and travel patterns will result in small businesses having limited customers and revenue far beyond June 30,” it said.