The U.S. Senate passed legislation to extend the Paycheck Protection Program (PPP) through August 8. The small business loan program expired on June 30, but had $130 billion in unused funds. The House of Representatives must pass the extension and it must be signed into law by President Donald Trump before it can take effect.
The Senate’s decision to extend the PPP comes shortly after the National Association of Home Builders (NAHB), along with the Home Builders Association of Michigan and the Home Builders Association of Southeast Michigan, filed a lawsuit against the U.S. Department of the Treasury and the U.S. Small Business Administration (SBA). The NAHB said “onerous regulations” included in the PPP prevented some builders and developers from accessing a “much-needed” source of funding and having the loans forgiven.
According to the National Lumber and Building Materials Dealer Association (NLBMDA), Senate Majority Leader Mitch McConnell told reporters that Congress will attempt to pass additional small business relief through a phase 4 stimulus bill between July 20 and August 7 before heading out on a month-long recess. In May, the NLBMDA submitted a letter to the White House with a list of priorities for a phase 4 coronavirus relief package, including a strengthened PPP, the deductibility of PPP loan expenses, and the assurance that dealers have flexibility for loan forgiveness up to three months.
Under the PPP, small businesses—companies with 500 employees or fewer—can apply for partially forgivable loans that can cover operating expenses. Originally allocated $349 billion as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, funding for the PPP ran out within two weeks. The government was quick to approve a bill including an additional $310 billion for the PPP. A recently issued Interim Rule from the Small Business Administration clarified that small businesses can qualify for partial loan forgiveness even if 60% of the PPP loan was not directed towards loan forgiveness and the covered period for loan forgiveness was extended from eight weeks after the date of loan disbursement to 24 weeks.