All, as you may have heard, the House resoundingly passed an updated version of its PPP “fix” bill, but the Senate did not act on it today. Please see the update below from our fantastic policy team in DC.
An update, the Senate held its pro forma session today and did not bring up their version of the PPP bill. They return to DC next week. Given the overwhelming support for the House bill, the Senate may be more inclined to take up the House version which would save the need to reconcile the two bills and delay the President’s signature. The dynamics over whether Republicans will honor the bill passed by the House in part by proxy (House Republicans have sued the Speaker, saying the process is unconstitutional) make this a more complicated situation than it might otherwise be.
The House just passed the Paycheck Protection Program Flexibility Act, HR 7010, by a vote of 417-1. (That hardly ever happens.) This is the House stand-alone version of the PPP “fix.” It was passed under a procedure called suspension of the rules, which requires a 2/3 vote. The overwhelming bi-partisan support is a good harbinger that the Senate will take similar action, although the pending Senate version differs from the House version. HR 7010 is attached.
You may note that the number of the House bill has changed since it was introduced. There are a couple of differences in HR 7010 compared to the prior version, HR 6886. One of them is very significant:
· The amount of loan forgiveness will be determined without regard to the FTE Reduction fraction if the recipient is able to demonstrate an inability to return to the same level of business activity as the business was operating prior to February 15, 2020. (This is helpful for employers, but it will of course raise questions around just what such a “demonstration” requires.)
In addition to the above, HR 7010 does the following:
· Extends the loan period to 5 years (Note that PPP borrowers have already signed promissory notes that refer to a 2-year terms, so there would need to be some modification process here.)
· Extends the PPP loan period throughDecember 31, 2020 (Who would have thought that this would have mattered given the initial rush of demand, but there is still more than $100B available in the PPP 2.0 fund.)
· Extends the loan forgiveness period from the date of origination to the earlier of 24 weeks or December 31, 2020 (As noted previously, the Rubio version in the Senate provides for 16 weeks, so this would need to be reconciled unless the Senate adopts this approach as Mary notes.)
· Exempts from the loan forgiveness computation employee reductions if the employer cannot hire back the same employee or a suitable replacement, or if operations are under the level prior to 2.15.20.
· Eliminates the 75/25 requirement (If this passes, it will be interesting to see if SBA ratchets back some of the flexibility around what can be included as non-payroll costs, because they expressly noted that some of the latitude was due to the 25% limit.)
· NEW: Allows an election to choose the original 8 week period as the loan forgiveness period
· Is effective as of date of enactment of CARES
Note that the House failed to pass HR 6782, the “Truth Act,” under suspension of the rules. The Truth Act would require the SBA to disclose details identifying loan recipients, amounts, etc. The Truth Act did not have broad Republican support. (It would be easy to make the obvious joke here that they can’t handle the Truth … so I OF COURSE will take that layup. Stay tuned for updates next week. Also, if you would like your voices heard on this, please contact your Congressional representatives and/or Senators. Or feel free to reach out to one of the policy team members copied above. They’ve been invaluable in this process. I’ve come to learn that deep down in places I don’t like to talk about at parties … “You want them on that Hill. You need them on that Hill.”)
Tune in next week!