(Washington, D.C.)—U.S. Senate Committee on Small Business & Entrepreneurship Ranking Member Ben Cardin (D-Md.), and Democratic Senators Chris Coons (Del.) and Jeanne Shaheen (N.H.), senior members of the committee, today introduced the Prioritized Paycheck Protection Program (P4) Act. A House companion was introduced today by Democratic Reps. Angie Craig (MN-02) and Antonio Delgado (NY-19).
The bill authorizes new lending under the Paycheck Protection Program (PPP) to small businesses with 100 employees or less, including sole proprietorships and self-employed individuals. Eligible businesses must have already expended an initial PPP loan, or be on pace to exhaust the funding, and must demonstrate a revenue loss of 50 percent or more due to the COVID-19 pandemic. The bill would extend the application deadline for initial PPP loans from June 30 to December 30, or longer, at the discretion of the Small Business Administration (SBA), and would use existing PPP funding to make P4 loans.
“Many small businesses will continue to struggle in the weeks and months to come,” Ranking Member Cardin said. “Congress must once again act urgently to support our most vulnerable small businesses through this crisis, so our economy can recover as quickly as possible after the pandemic. Every business we prevent from failing now, is a business that will be in a position to create jobs during the recovery.”
“PPP has been the lifeline that has kept many small businesses from going under,” said Shaheen. “Yet, revenues for many small businesses are still at unsustainable lows and a second loan is needed as soon as possible. The economic fallout from COVID-19 has been an existential threat to our nation’s small businesses and Congress cannot letup in its efforts to get them get through this crisis. This legislation prioritizes smaller businesses, particularly those in the restaurant and hospitality industries, which have been hit especially hard in recent months. Every effort must be made to make sure federal relief reaches small businesses that need help the most and this legislation is a vital next step towards that goal.”
“In conversations with small businesses up and down the state of Delaware, it’s become clear that many employers in vital sectors need more federal aid through the Paycheck Protection Program. Even as closures are ending, countless Delaware businesses are struggling to survive this crisis,” said Senator Coons. “That’s why I’m proud to introduce this bill with Senators Cardin and Shaheen that will provide substantially more aid to the smallest, most vulnerable businesses – including many minority-owned businesses – that have been hardest hit by this pandemic. Only by aggressively targeting aid can we save our small businesses, the jobs they provide, and the Main Streets that make our communities proud.”
The COVID-19 recession has affected all industries, especially the arts, entertainment, and recreation industries, which lost half its workforce between February and April of this year; nearly half of all restaurant workers lost their jobs over the same period. PPP, which has provided more than 4.6 million businesses and nonprofits with more than $513 billion in loans, has prevented even further losses in these hard-hit industries, with restaurant hires accounting for 1.4 million of the 2.5 million jobs added to the economy last month.
The bill follows a “flash report” released by the Small Business Administration (SBA) Inspector General last month, which found that SBA’s failure to issue guidance to prioritize underserved and rural markets in PPP “did not fully align” with the Congressional intent of the CARES Act.
To ensure that underserved and hardest-hit businesses can access P4 loans, publicly traded companies are ineligible for the loans; hospitality and lodging businesses with multiple locations are limited to an aggregate loan amount of $2 million; and the bill would reserve the lesser of $25 billion or 20 percent of PPP funds for employers with 10 or fewer employees, as well as small businesses in underserved and rural communities. The bill also directs SBA to issue guidance to give priority to businesses with 10 employees or fewer in the processing and disbursement of P4 and PPP loans, and requires SBA to request demographic information of P4 and PPP loan recipients.
Additionally, the P4 Act would:
- provide eligible small businesses with as much as 250 percent of monthly payroll costs worth up to $2 million;
- prevent affiliated businesses with separate locations from receiving more than $2 million in aggregate P4 loans; and
- allow P4 recipients maximum flexibility to apply for loan forgiveness as soon as 8 weeks after the loan disbursement.