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Financial Planning > College Planning > Student Loan Debt

Sen. Rubio Wants to Press Forward With Small-Business Loan Extension

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An architect of the small-business Paycheck Protection Program is pushing for a quick Senate vote on extending the program Thursday before the chamber leaves for a Memorial Day recess.

Senator Marco Rubio, chairman of the Small Business Committee, said he is “increasingly optimistic” there will be bipartisan support to lengthen the current eight-week time period during which businesses must use the loan money to pay employees and for other expenses to have the loan forgiven.

The Senate may vote Thursday on such a change by unanimous consent, which allows expedited consideration of legislation, according to a person familiar with the plans. The length of the extension hasn’t yet been determined, the person said.

Rubio said in a video posted on Twitter Wednesday that he expected an effort in the Senate this week to pass a measure extending the loan-forgiveness period to as many as 16 weeks.

House Speaker Nancy Pelosi said the House will vote next week on a separate PPP measure. Lawmakers are discussing lengthening the period to 24 weeks and making other changes such as relaxing a requirement that at least 75% of proceeds must be spent on payroll. Some companies want to spend more on rent and other expenses.

Rubio has said he hoped for a bill just extending the loan-forgiveness period.

Republicans and Democrats alike have heard from business owners worried about running out of money to pay their employees. Any individual senator could object to the measure, though, which would prevent it from being passed this week.

Treasury Secretary Steven Mnuchin said the administration supports extending the eight-week period, which would require action by Congress, because such a move doesn’t require additional funding and has bipartisan support. But he defended the 75% payroll spending rule, which the administration could change on its own, saying it matches the intent of the law.

“We want most of this money to go to workers,” Mnuchin said Thursday at an online event hosted by The Hill newspaper. “We believe that the 75% was exactly consistent with the way the program was designed.”

The Paycheck Protection Program, the centerpiece of the $2.2 trillion relief package that Congress enacted in March, allows loans of as much as $10 million that can be forgiven if a business spends it within eight weeks on payroll and certain other expenses such as rent.

The idea was to help businesses keep workers employed while they were closed during stay-at-home orders and be ready to reopen when the bans lifted. But restaurants and other small businesses have said they need more time to spend the funds because they won’t be ready to reopen or be fully functional at the end of eight weeks.

“We’re in the 10th week of the pandemic, and I think it’s going to take some time for our restaurants and our owners to get back to the capacity levels and the traffic levels that we were seeing pre-Covid,” Jose Cil, the chief executive of Burger King parent company Restaurant Brands International, told President Donald Trump a meeting at the White House on Monday. Cil backed an extension to 24 weeks.

The $3 trillion Democratic relief package passed by the House last week, which is opposed by Republicans, would extend the loan-forgiveness period to 24 weeks.

The timing matters because the first companies that received loans after the PPP program opened on April 3 will see the eight-week loan-forgiveness periods begin to expire at the end of next week and in early June.

– With assistance from Saleha Mohsin.

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