Trump signs small business aid redesign into law, but problems loom

“This bill will serve as a mid-term correction by easing restrictions on small businesses that already face enough challenges, and giving business owners the flexibility they need to make decisions that fit the bill. better for their particular situation, “said Senator Angus King (I-Maine) said.

Trump signed legislation at a White House event in which he welcomed the Labor Department report earlier today that unemployment fell unexpectedly in May and the economy had created more than 2 million jobs.

But the new law is by no means the last major in-store change for the program, which has been subject to an evolving set of rules since the Small Business Administration and Treasury Department hastily launched it on April 3. . There is growing pressure on Congress and the Trump administration to further reorganize the program, including streamlining the process that companies must follow in the weeks and months to come to convert loans into grants.

Senators are already planning to correct what they say are drafting errors in the bill Trump signed, which could have unintended consequences.

A major concern for Senate President of Small Business Marco Rubio (R-Fla.) And Senator Susan Collins (R-Maine) is how the bill, which was introduced in the House, would attempt to give companies more flexibility to spend salary expenses. It reduces the amount that must be spent on the payroll to get the loan forgiveness from 75% to 60%. But Rubio and Collins argue that the wording of the bill makes this 60 percent requirement a “cliff” in which businesses would lose a partial loan forgiveness if they spent a substantial amount on the wage bill but fell below the threshold. .

The SBA and the Treasury have not publicly announced how they will interpret the language. Rubio said the administration is committed to correcting the bill’s “inadvertent technical errors”, but added that Congress should adopt a fix if the agencies fail to do so. Spokesmen for the SBA and the Treasury did not respond to requests for comment on the commitments mentioned by Rubio.

Collins told reporters Thursday that staff are drafting a technical change bill and she hopes to discuss it next week with Rubio as well as with the senses Ben Cardin (D-Md.) And Jeanne Shaheen (DN.H. ).

In a separate statement, Collins highlighted two priorities. She wants to “correct” the wording of the 60 percent payroll requirement to allow businesses to receive a partial discount if they don’t reach the threshold. It also wishes to authorize the use of loans for protective equipment, plexiglass shields and renovations in order to comply with CDC directives when companies reopen.

And while the new flexibility could help boost demand for flatlining for the program, $ 120 billion remains unused, some lenders believe that one of the changes in the bill could deter banks from offering the loans. This would give new borrowers at least five years to repay the loans, which would significantly delay the two-year time limit that is applied today. This would leave banks hanging on longer with a low interest loan on their books.

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“I don’t see the banks extending a 1% loan over five years,” said Paul Merski, executive vice president of the Congressional Relations Group for the Independent Community Bankers of America. “It’s too risky.”

Lenders and consumer groups are also pushing to simplify the forgiveness process, which they find too complicated and cumbersome.

The community banking group is calling for all loans of $ 1 million or less to have a “presumption of conformity” under the remission rules. He also wants the administration to propose a loan forgiveness calculator and reduce the necessary administrative formalities. Large lenders, represented by the Bank Policy Institute and the Consumer Bankers Association, want legislators to automatically authorize the conversion of loans of $ 150,000 or less into grants.

These small businesses and their employees are the backbone of our country’s economy and communities, “said the Bank Policy Institute and the Consumer Bankers Association.” Their time and resources would be better focused on reviving and operating the economy safely, rather than on heavy paperwork. . “

Legislators are also pressing for funds to reach employers left behind from Covid-19 aid programs, including businesses owned by minorities and women.

Cardin, the best Democrat on the Senate Small Business Committee, and Senator Cory Booker (DN.J.) have proposed to set aside funds for smaller businesses and to pay banks extra fees to serve areas that have the no more help needed. They introduced legislation Thursday with Senators Rob Portman (R-Ohio) and Jim Lankford (R-Okla.) That would allow small business owners with criminal records to apply for loans under the paycheck protection program. .

The minority leader Chuck Schumer is pushing the administration to simplify the pardon process, according to a source close to the New York Democrat. It also seeks to ensure that funding goes to lenders such as community development financial institutions and minority depository institutions to help raise money for small businesses in communities of color. Schumer believes the administration has the power to resolve problems, but if necessary, he would consider legislation, the source said.

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