Reed: PPP Isn’t Serving Restaurants & Hospitality Industry Well & Must Be Revamped to Increase Flexibility & Transparency
Paycheck Protection Program currently requires use of funds within eight weeks, Sen. Reed says deadline for small businesses is too restrictive and should be extended to at least 24 weeks
WASHINGTON, DC – With hundreds of thousands of restaurants and other small businesses hanging on by a thread, U.S. Senator Jack Reed is calling on the U.S. Senate to take swift action to fix the Paycheck Protection Program (PPP). Senator Reed says Congress must extend the amount of time small businesses have to spend PPP loans from 8 weeks to at least 24 weeks, while also increasing the repayment period from 2 years to 5 years, and reducing the 75 percent payroll-spending minimum. Reed says additional steps must also be taken to improve transparency, prevent fraud, and ensure PPP better serves Main Street businesses and U.S. taxpayers.
“Small businesses make up a big part of our economy and Congress needs to urgently fix PPP and ensure this federal funding is being put to good use. Main Street businesses are reeling and they need additional flexibility and assistance. The eight-week requirement to use the funds makes no sense at this point, especially for restaurants and other industries and these restrictions need to be lifted. Instead of wasting time and ignoring the problem, Senate Republican leaders should allow bipartisan adjustments to help small businesses survive,” said Senator Reed.
Senator Reed says PPP is not working as intended and notes that the Trump Administration’s haphazard implementation and flawed interpretation of PPP has made things harder for small businesses and held back economic recovery. The Trump Administration imposed rules not included in the law that have restricted aid to independent mom and pop shops, while allowing national chains to cut to the front of the line. And for weeks, Senate Republican leaders refused to hold a vote on any COVID-19 related legislation, including bipartisan fixes aimed at helping restaurants and other industries leverage this aid and save hundreds of thousands of jobs.
“Senator McConnell may feel no urgency to fix PPP, but small business owners can’t afford this type of delay and dysfunction. Congress needs to help provide clarity so small businesses can plan for their future. I urge the Senate to act swiftly to help Main Street businesses survive and provide a measure of much needed economic stability for their employees and communities,” said Senator Reed.
Congress created the Paycheck Protection Program in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law No. 116-136) and appropriated an initial $349 billion for the program, which was intended to be a lifeline for small businesses and workers. PPP offers forgivable small business loans to cover two months-worth of payroll and overhead costs. But PPP has been plagued by problems, mismanagement, and lack of sound guidance from the Trump Administration. After the first round of PPP funding lapsed, Senator Reed sought important legislative fixes and updates to the program. Unfortunately, Congressional Republicans blocked any legislative fixes from being included in the second round of PPP funding, which increased the overall allocation to $659 billion.
And instead of addressing known problems with the bill during the latest legislative session, Senate Republican leaders failed to bring PPP improvements up for a vote before the Memorial Day recess.
“Restaurants are doing their part to ensure the safety of customers and employees, but Senate Republicans are failing to fix PPP and help restaurants survive. They spent the last three weeks actively ignoring this problem to focus on partisan nominees and refusing to consider COVID-19 legislation. Meanwhile, the economic hole is getting deeper for Main Street businesses and their employees,” said Reed, who also noted that increased transparency and oversight are needed to prevent massive waste and fraud.
“There needs to be an increased commitment to transparency, accountability, and oversight of PPP. If Congressional Republicans don’t join Democrats to enact needed reforms, billions of taxpayer dollars could be misused and stolen. There has to be meaningful commitment to deterrence and holding every link in the chain -- from lenders to borrowers to the Administration -- accountable. Instead of withholding data from the public, SBA and Treasury should ensure taxpayers know where their dollars are going and allow communities to see who is getting these funds,” said Reed.
The U.S. House of Representatives has already passed PPP reforms as part of the HEROES Act to extend the loan period to 24 weeks from the origination date. The House-passed measure would also allow businesses until the end of the year to rehire full time workers to qualify for forgiveness, and remove the 75 percent payroll requirement. Senate Majority Leader Mitch McConnell (R-KY) declared the HEROES Act dead on arrival in the Senate.
Speaker Nancy Pelosi (D-CA) announced plans for the House to vote this coming week on a stand-alone bill that would extend a deadline for spending PPP loans and make other changes. Reed says the Senate must quickly approve the House version of PPP reform.
As of May 16, approximately 15,850 Rhode Island small businesses have been approved for $1.86 billion under PPP, which is administered by the U.S. Small Business Administration (SBA) and U.S. Treasury. Nationwide, more than $513 billion in PPP assistance has been approved for 4.3 million borrowers.