On May 28, the House voted 417-1 to pass legislation that will make urgently needed changes to the Paycheck Protection Program (PPP), created to assist small businesses struggling during the ongoing COVID-19 pandemic.

The Paycheck Protection Flexibility Act, introduced by Reps. Chip Roy (R-TX) and Dean Phillips (D-MN), is designed to make PPP loans more accessible by making its terms of use more flexible. Importantly, the bill does not expand eligibility for the PPP to include 501(c) associations as the House-passed HEROES Act does.

The legislation would give small businesses more time to use loans under the PPP by extending the eight-week period in which they must use the money to qualify for loan forgiveness to 24 weeks. The bill also gives PPP recipients more flexibility by changing the 75/25 rule, which requires fund recipients to use 75 percent of the money for payroll costs in order to be eligible for loan forgiveness. The new ratio would be at least 60 percent on payroll and no more than 40 percent on other expenses.

“I didn’t want to see another local institution go out of business because Congress is more focused on politics than helping Americans who need it,” Roy said in a press release. “Fortunately, our bipartisan bill puts Americans first and will ensure our favorite small businesses are around on the other side. I am thankful to my colleagues for their overwhelming support today and I look forward to its swift passage in the Senate.”

House passage of the Roy-Phillips bill reflects a leadership decision to focus on smaller changes to existing programs like the PPP that were created to assist businesses during the pandemic, although another large-scale package of COVID-19 relief will likely be needed sooner than later. Senate leaders have panned the $3 trillion HEROES Act and negotiations on an alternative relief measure have not yet begun.

There are two similar bills focused on quick fixes for the PPP circulating in the Senate. Sens. Cory Gardner (R-CO), Angus King (I-ME) and Steve Daines (R-MT) introduced a companion bill to the Roy-Phillips bill last Friday, and Sen. Marco Rubio (R-FL), chairman of the Senate Small Business Committee, also introduced a bill last week that would give businesses up to 16 weeks to use the loans instead of eight weeks. No votes have been scheduled as yet for either bill in the Senate.

ASAE has been advocating for association access to the PPP in Senate legislation or in a negotiated larger COVID-19 relief package that will likely take shape next month.

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