The Senate on Wednesday passed a bipartisan bill to give
small businesses more time and flexibility to use their Paycheck Protection
Program (PPP) loans. It now heads to the White House for President Trump’s
Currently, loan recipients have eight weeks to spend
Paycheck Protection Program loans and must use 75% of the proceeds for payroll
expenses in order to be eligible for loan forgiveness. The Paycheck Protection
Program Flexibility Act extends the period to use the loans to 24 weeks and
mandates that borrowers spend 60% on payroll. It also extends the June 30 rehiring
deadline. It also gives businesses up to five years, instead of two, to repay
any money owed on a loan.
The travel industry has been calling for such modifications
since the program launched, since most hospitality businesses are only now starting
to reopen and in some places still can’t.
U.S. Travel Association executive vice president of public
affairs and policy Tori Emerson Barnes called the bill “another important step
in providing relief to small businesses that otherwise will not survive until
the economic recovery phase.”
“The modification to the portion of funds that can be used
for non-payroll expenses is especially crucial to travel-related small
businesses, which have comparatively high capital overhead but virtually zero
incoming revenue because of the necessary measures in place to stem the spread
of the pandemic,” Barnes said.
The measure was introduced in the House last week by
representatives Dean Phillips (D-Minn.) and Chip Roy (R-Texas).
Barnes called on the federal government to make additional
changes to the PPP, including extending its eligibility.
“We urge leaders to move urgently to enact the next phase of
coronavirus response legislation, which is absolutely vital to the future of
the travel and tourism industry, and to prioritize expanding eligibility to
those most hard hit by this pandemic such as destination marketing
organizations,” Barnes said.
ASTA applauded the Senate’s passage of the bill.
It includes a number of changes the Society advocated for:
five-year loan terms; a reduction of the requirement that 75% of the loan must
go to the payroll to be eligible for forgiveness; enabling forgivable expenses
over 24 weeks, compared to the current eight; and enabling companies to restore
their headcount without jeopardizing forgiveness by the end of the year, as
opposed to the current June 30.
“While the PPP will remain complex, this bill gives more
flexibility to PPP recipients and increases the chances that loans can be fully
forgiven,” said Eben Peck, ASTA’s executive vice president of advocacy.
Jamie Biesiada contributed to this report.