Small Business Majority Commends the Passage of PPP Reforms and Recommends Next Phase Assistance for Small Businesses
Recovery will require bold initiatives like a direct grants program for businesses under 100 employees and automatic forgiveness of all PPP loans under $150,000
Washington, DC – Today, John Arensmeyer, Founder and CEO of Small Business Majority, released the following statement after the Senate passed the Paycheck Protection Program (PPP) Flexibility Act (H.R. 7010), which makes critical changes to PPP to better serve struggling small business owners in the wake of the COVID-19 pandemic. The bill now heads to the President’s desk for signature.
“We are pleased that the Senate has taken action to address many of the shortcomings of PPP. For months, we have heard from thousands of small businesses that PPP’s rigid structure does not meet their needs, and 80% of business owners in our network fear that under current rules their loan may not be forgiven. Now, as millions of small business owners near the end of their allowed PPP spending period, the passage of the Paycheck Protection Flexibility Act could not come at a more critical time.
Extending PPP’s spending period to 24 weeks will ease the pressure on business owners to reopen and restructure before they are ready or able to reopen. The legislation also eases the requirement that businesses return their payroll to pre-pandemic levels, so long as they have made attempts to rehire staff. This is critical, as low consumer confidence and post-pandemic changes will prevent many businesses from operating at the same level as before. Finally, the legislation reduces the requirement that 75% of the funds are spent on payroll to 60%, thereby providing more flexibility to businesses with high overhead costs to use the funds on expenses like rent, mortgage, and utilities. While lowering the payroll expense requirement is a step in the right direction, we had hoped that the Senate would have amended the legislation to remove this requirement entirely, as many businesses with high fixed costs and decreased revenue will still find meeting this requirement difficult.
While we urge the President to quickly sign this bill into law, we also call on Congress to not take its foot off the gas in developing additional legislation to help America’s small business community recover. Even with these changes in place, for millions of small businesses, PPP will not be enough to sustain a full recovery. Earlier this week the Congressional Budget Office announced it does not expect our economy to fully bounce back until 2030. In the months and years to come, the smallest, most vulnerable businesses will require additional assistance in order to return our small business community to its position as the driver of the American economy.
The next phase of assistance must include a bold direct grants program for businesses with under 100 employees and automatic PPP forgiveness for all loans under $150,000. Simply thinking a one-time loan program will be enough is shortsighted and will leave America struggling well beyond 2030.”
About Small Business Majority
Small Business Majority was founded and is run by small business owners to ensure America’s entrepreneurs are a key part of a thriving and inclusive economy. We actively engage our network of more than 65,000 small business owners in support of public policy solutions and deliver information and resources to entrepreneurs that promote small business growth. Our extensive scientific polling, focus groups and economic research help us educate and inform policymakers, the media and other stakeholders about key issues impacting small businesses and freelancers. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.