WASHINGTON — A broad coalition of national trade groups is urging congressional leaders to make changes to the Small Business Administration's Paycheck Protection Program that would provide more flexibility to participating small businesses.
In a joint letter sent May 21, the groups called for "emergency legislative and administrative action" to repeal the program's requirement that 75% of the loan be used to cover payroll costs and 25% be used to cover mortgage, rent and utilities during an eight-week period.
Additionally, the groups — including the Tire Industry Association, Specialty Equipment Market Association, Motor & Equipment Market Association and National Automobile Dealers Association — are asking for an extension of the eight-week period that the funds must be spent to qualify for loan forgiveness and for an extension of the June 30 safe-harbor date for rehiring workers and restoring salary levels.
"These steps would conform the PPP with the reality of the gradual reopening now occurring across the United States and would help ensure that more small businesses remain in operation," the groups said in the letter.
The House is expected to vote this week on a bipartisan bill that would allow loan forgiveness to extend beyond the eight-week period and enable businesses to have the flexibility to spread loan funds over the full course of the COVID-19 crisis. It also would get rid of restrictions limiting nonpayroll expenses to 25% of the loan proceeds and would allow businesses that make a good-faith effort to rehire employees, but are unable to, to still receive loan forgiveness.
The Senate last week failed to adopt a similar bill.
"The current rules made sense when the program was created, and it was anticipated that stay-at-home orders would last only a few weeks," the groups said.
"However, their implementation in the current environment is making it harder for small businesses to survive. Small businesses that close permanently will never be able to rehire their employees."
The PPP is part of the $2.2 trillion coronavirus relief package known as the Coronavirus Aid, Relief and Economic Security Act. The program, as of May 23, had approved approximately 4.4 million loans, totaling more than $511 billion from 5,511 lending institutions.
The American International Automobile Dealers Association told Automotive News — a sister publication of Tire BUsiness — that as the COVID-19 crisis stretches into the summer months, "auto retailers need flexibility in order to continue to pay their employees, meet operating expenses and serve their communities.
"We are asking Congress, the Small Business Administration and the Department of Treasury to amend PPP rules to allow participants to adjust to current market conditions. These relatively small changes would make a big difference in how auto retailers in particular are able to comply with an orderly, phased reopening."