Rules for PPP loans are ‘too restrictive’

Congresswoman Abigail Spanberger (D-VA) says the rules the Trump administration established for the Paycheck Protection Program make it difficult for small-business owners to use the loans.

“The rules put in place — not the legislation as we passed with the CARES Act, but the rules that the SBA put on these dollars — are too restrictive,” Spanberger said in an interview with Yahoo Finance.

Spanberger argues the rule requiring 75% of the loan to be used on payroll in order to qualify for forgiveness is not doable for all business owners.

“We want to ensure that workers are getting paid, but for businesses that have expensive infrastructure — rent, utilities costs — and might only employ a few workers, they can’t make that ratio,” said Spanberger.

“Putting these rules, again not what we legislated, on these loan dollars really impedes the ability for our small businesses to be able to use them,” she added.

Spanberger, along with Rep. Mike Gallagher (R-WI) and Rep. Josh Gottheimer (D-NJ), wrote a letter to the Treasury Department and the Small Business Administration, asking them to give more flexibility to small-business owners.

The lawmakers also want the administration to clarify rules for business owners who might not be able to rehire workers by June 30, as required in the Treasury Department’s guidance.

“Many small businesses are concerned that, due to the extenuating factors surrounding the pandemic, employees that have been let go will not want to immediately return to their employment. According to PPP guidance this would negatively affect a borrower’s loan forgiveness, even though this is a factor outside of said borrower’s control,” the lawmakers wrote.

WASHINGTON, DC – MARCH 13: U.S. Rep. Abigail Spanberger (D-VA) speaks to members of the media at the U.S. Capitol March 13, 2020 in Washington, DC. Speaker of the House Rep. Nancy Pelosi held a briefing on the Coronavirus Aid Package Bill that will deal with the outbreak of COVID-19. (Photo by Alex Wong/Getty Images)

As of Monday morning, $221 billion in PPP loans has been approved — more than 60% of the $349 billion Congress approved for the program. Republicans are pushing for an extra $250 billion for small-business loans, but Democratic leaders oppose putting more money into the program without addressing other issues as well.

House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer want additional funding for state and local governments, hospitals and an increase in SNAP funding.

“I support funding this program to a greater extent, but just as we are talking about essentially ensuring that our small businesses are able to open their doors when we’re able to open our economy, we need to make sure that our hospitals are not closing down and our small localities are not faltering,” said Spanberger.

Both parties need to come to an agreement that could pass without requiring many lawmakers to make the trip back to Washington for votes. Lawmakers are scheduled to return to Washington on April 20, but that could change if leaders determine it’s not safe for members of Congress to travel and gather in the Capitol.

“From a public health standpoint the 20th may or may not be possible. I hope that we will make a decision based on science and based on setting a good example for the rest of the nation,” said Spanberger. “I think Congress should be aggressively planning for contingencies in the event that next week, a return to normal isn’t possible.”

Spanberger also told Yahoo Finance there should be alternative options for voting in the November election, in case the pandemic is still active.

“The fact that we are in a public health crisis and we may rebound into one by November, there are discussions about the fact that this virus is not going to go away even if we get it under control,” said Spanberger. “Putting millions of Americans into polling places across the country does seem like it poses particular risks.”

Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.

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