To Help Small Businesses Weather Coronavirus, Gardner, King, Daines Introduce Bipartisan Legislation to Improve Paycheck Protection Program

Bill would extend length of time businesses could use funds, eliminate regulation that limits only 25% of funds to non-payroll expenses

Washington, D.C. – This week U.S. Senators Cory Gardner (R-CO), Angus King (I-ME), and Steve Daines (R-MT) introduced the Paycheck Protection Flexibility Act, a bipartisan bill that would make necessary changes to the Paycheck Protection Program (PPP). The legislation would adjust PPP rules that have prevented some businesses from fully utilizing the program to address the severe economic impacts of the coronavirus pandemic. Most significantly, the legislation would extend loans over a longer period of time and allow for some flexibility in where the funds can go – as many small businesses face high commercial rent rates for their retail spaces. In addition to Senators Gardner, King, and Daines, U.S. Senators Tim Kaine (D-VA), Thom Tillis (R-NC), and Debbie Stabenow (D-MI) are original cosponsors of the legislation. Companion legislation has been introduced in the House of Representatives by U.S. Representatives Dean Phillips (D-MN) and Chip Roy (R-TX).

“It’s clear that the original timeline for the Paycheck Protection Program has become outdated and that we must increase the flexibility of the PPP to better support small businesses and workers in Colorado,”said Senator Gardner. “I’m proud to partner with my colleagues across the aisle on the bipartisan Paycheck Protection Flexibility Act, which greatly increases the amount of time that businesses have to spend their PPP dollars and allows them to cover other essential costs. This will provide tremendous relief for workers and small businesses in Colorado and across the country.”

“As the economic impacts of coronavirus continue to grow, we need to adjust and improve our response to meet the magnitude of this crisis,” said Senator King. “The Paycheck Protection Program has been a help to many businesses, but several of the program’s requirements prevent business owners from addressing their most pressing needs. If we want to help small businesses in Maine and across the country weather this storm and come out the other side, we need to give them the flexibility to address their specific challenges. This bipartisan legislation will build on the good and help keep local institutions alive during this pandemic – Congress should pass this legislation, quickly.”

“Montana small businesses need more flexibility under the Paycheck Protection Program to keep their doors open, support their workers and protect Montana jobs as we work to safely reopen the economy,”said Senator Daines. “PPP has been a great success for most small businesses, but we need to act to make it work for all Montana small businesses and workers. My bipartisan proposal is a result from listening to feedback from Montanans on what flexibility they need under PPP to make it even more effective.”

Specifically, the Paycheck Protection Flexibility Act legislation will:

  1. Allow forgiveness for expenses beyond the 8-week covered period. The 8-week timeline does not work for businesses that are prohibited from opening their doors, or those that will only be allowed to open with restrictions. Businesses need the flexibility to spread the loan proceeds over the full course of the crisis until demand returns. Otherwise, employees will simply be furloughed at the expiration of the 8 weeks. This provision will allow the businesses to choose between using their loans in the initial 8 weeks or extending the period for up to 24 weeks.
  2. Eliminate restrictions limiting non-payroll expenses to 25% of loan proceeds. In order to survive, businesses must pay fixed costs. The PPP loans require that 75% of the loan go to payroll. For many businesses, payroll simply does not represent 75% of their monthly expenses and 25% does not leave enough to cover mortgage, rent, and utilities. Retaining employees is not possible if a business cannot retain their physical location
  3. Eliminate restrictions that limit loan terms to 2 years. According to the American Hotel and Lodging Association, full recovery for that industry following both the September 11, 2001 terrorist attacks and the 2008 recession took more than two full years. This is the same for many other industries. If the past is any indication of the future, it will take many businesses more than two years to achieve sufficient revenue to pay back the loan.
  4. Ensure full access to payroll tax deferment for businesses that take PPP loans. The purpose of PPP and the payroll tax deferment was to provide businesses with capital to weather the crisis. Receiving both should not be considered double-dipping. Businesses need access to both sources of cash flow to survive.
  5. Extend the rehiring deadline to offset the effect of enhanced Unemployment Insurance. To receive loan forgiveness under PPP, a business must rehire employees by a deadline of June 30, 2020. However, the enhanced Unemployment Insurance created through the CARES Act is higher than the median wage in 44 states.  Many businesses have reported an inability to rehire employees because they are making more on Unemployment than they made working. To mitigate this unintended consequence, the deadline to rehire employees under PPP should be extended to align with the expiration of enhanced Unemployment Insurance.
  6. Adjusts program’s standards to account for economic realities following the coronavirus pandemic. If economic conditions prevent businesses from reaching pre-coronavirus revenue levels and businesses aren’t able to rehire all employees, this legislation would make sure businesses are still able to receive loan forgiveness.

The Paycheck Protection Flexibility Act is supported by the International Franchise Association, American Hotel and Lodging Association, National Federation of Independent Business, National Restaurant Association, US Travel Association, Small Business Majority, U.S. Hispanic Chamber of Commerce, National Small Business Association, National Association for the Self-Employed, Small Business and Entrepreneurship Council, and Economic Innovation Group.


Cory Gardner is a member of the U.S. Senate serving Colorado. He sits on the Energy & Natural Resources Committee, the Foreign Relations Committee, the Commerce, Science, & Transportation Committee, and is the Chairman of the Subcommittee on East Asia, the Pacific, and International Cybersecurity Policy.