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PPP amendment would have added funds to loan program, extended it through December 31

On October 20, the Senate held a test vote on legislation prepared by the Republican leadership that would have reopened the CARES Act's Paycheck Protection Program (PPP), which closed for new loan applications on August 9, extending it through the end of the year and increasing its lending authority from $659 billion to $779.6 billion. Republicans and some Democrats defeated a motion to kill the legislation, 40-57, but the maneuver did not advance the PPP bill. Among several other provisions, the amendment would have appropriated $257.6 billion in new funds for the Small Business Administration to guarantee first- and second-round PPP loans.

Attached with this alert please find PDFs with the legislative text of the amendment as well as a one-page summary.

The PPP measure came to the Senate floor as an amendment #2680 to S. 178, the legislative vehicle that Republicans have been using to attach pandemic-related legislation to, which frees them from having to vote on a motion to proceed to a new bill. The vote came in the form of a motion to table (or kill) the PPP amendment offered by Majority Leader Mitch McConnell (R-KY). All Republicans voted against tabling the PPP amendment, joined by Democratic Sens. Maggie Hassan (NH), Doug Jones (AL), Gary Peters (MI), Jeanne Shaheen (NH) and Mark Warner (VA). Sens. Kamala Harris (D-CA), Rand Paul (R-KY) and Kyrsten Sinema (D-AZ) did not vote.

The tabling motion, while it did not move the underlying PPP legislation any closer to passage, was seen as a way for Senate Republicans to place themselves on the record as supporting an extension of the PPP while under tight time restrictions limiting what they can do on the floor. The Senate GOP leadership also sought to force Democrats to vote against a PPP amendment on the floor. The vote served as a prelude to Senate Republicans' plans on October 21 to vote on cloture (ending debate) on a modified version of their $500 billion "targeted" coronavirus relief package (the HEALS Act). 

On the floor, McConnell said, "The Democratic leaders have spent months holding out for a long far-left wish list of non-COVID related priorities and restricting additional aid until they get it. All or nothing. All or nothing — that's been their position. There's no reason the second round of the Paycheck Protection Program should wait another single day." Senate Minority Leader Chuck Schumer (D-NY) replied on the floor, "The truth is, because the leader can't pass anything on the floor, he is resorting to a series of political stunts. That's all. Everyone knows it."

According to a staff summary from Senate Republicans, the PPP amendment would have:

PPP Second Draw Loans

• Provided $257.64 billion in funds to support PPP and PPP Second Draw Loans
• Defined eligibility for PPP Second Draw Loans as small businesses that meet the applicable SBA revenue size standard, have no more than 300 employees and demonstrate at least a 35% reduction in gross revenues between comparison quarters in 2019 and 2020
• Included a $25 billion set-aside for entities with 10 or fewer employees and a $10 billion set-aside for loans made by community lenders
• Set a maximum loan size equal 2.5 times average total monthly payroll costs, up to $2 million, and included a rule that businesses that received a PPP loan may not receive another PPP loan that aggregates to more than $10 million
• Continued to apply the 60/40 cost allocation for payroll and non-payroll costs to receive full PPP forgiveness

PPP Improvements

• Expanded forgivable expenses to include covered supplier costs, covered worker protection expenditures and covered operations expenditures
• Provided for an expanded lender safe harbor
• Allowed borrowers to select a loan forgiveness covered period between eight weeks and 24 weeks during which to spend loan proceeds on forgivable costs
• Simplified the forgiveness application process for smaller loans while increasing SBA's ability to audit and review forgiven loans (and appropriated $50 million to support this audit authority)
• Established a specific PPP loan calculation for farmers and ranchers
• Provided Farm Credit System Institutions with greater certainty and equity in PPP lending participation
• Expanded PPP eligibility to include certain IRC Section 501(c)(6) organizations, with 300 or fewer employees, excluding professional sports, political campaigns and lobbying expenses
• Prohibited the use of PPP loan proceeds for lobbying activities
• Clearly defined "seasonal employer"
• Established a procedure in the bankruptcy process if the Administrator determines certain companies in Chapter 11 are eligible for PPP loans

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ATTACHMENTS

Continuing Paycheck Protection Program Act Summary

Text of Continuing Paycheck Protection Program Act