The Senate passed legislation Wednesday that would allow businesses to use a larger percentage of Paycheck Protection Program loans for non-payroll purposes.
The House already has passed H.R. 7010; the Senate passed it by unanimous consent. It now goes to President Trump, who is expected to sign it.
The bill allows businesses receiving the loans to use 40% of their loan proceeds for non-payroll purposes. The PPP currently allows businesses to use 25% for such purposes. The bill also allows businesses more time to use the funds they receive under the program.
The bill does not, however, address many of the concerns that credit unions have raised about the PPP. “Unfortunately, as was expected, the compressed timeframe in which the PPP was enacted and implemented resulted in many challenges for our member credit unions in making, processing, and disbursing loans,” CUNA President/CEO Jim Nussle wrote in a letter to the Senate Banking Committee last month.
For instance, credit union trade groups have asked for greater clarity on issues such as lender liability.
Nonetheless, NAFCU President/CEO B. Dan Berger applauded the Senate action. “As the coronavirus crisis evolves, small businesses are adjusting their plans daily,” he said. “These reforms will allow each to make the strategic decisions that are best for their business and employees amid uncertainty and economic hardship.”
During floor debate Wednesday, Senate Minority Leader Chuck Schumer (D-N.Y.) emphasized the need to pass the bill without changes, since the House is not in session and would be unable to consider the changes. “If we change this bill and then go to conference with the House, we risk too much delay,” he said. “We should move the bill now.”