WASHINGTON (NEXSTAR) — Small business owners who have taken out emergency loans from the federal government to stay afloat during closures aimed at slowing the spread of coronavirus now fear they could do more damage that good.
Under the current requirements for the Paycheck Protection Program, businesses that don’t spend at least 75% of their loans on employees within eight weeks, rehire employees by June 30 or return the cash by May 18 will be ineligible for loan forgiveness.
Dr. Marshall Gibbs said he has been unable to reopen his dental practice in Washington state under extended stay-at-home orders, and that could leave him ineligible for forgiveness.
“I’m having to determine whether I need to give it back or not before my business is even allowed to be open,” Gibbs said. “The payment would be roughly $9,000 a month (without loan forgiveness). … We wouldn’t be able to afford those payments.”
Tom Sullivan, the vice president of small business policy at the U.S. Chamber of Commerce, said Congress must make the PPP rules more flexible.
“In order for that PPP program to work after stores start opening, there is a need to shift a little bit of the forgiveness priority,” he said.
The U.S. Small Business Administration, which is handling the distribution of the loans, said tens of thousands of loan recipients won’t qualify for forgiveness under current rules.
“That’s not what the intent was,” said Rep. Darin LaHood, R-Ill., who has introduced bipartisan legislation to extend PPP deadlines. “(Small businesses) didn’t ask for being shut down, they want to do this, but they were forced to do it by the government. We have a responsibility to look out for them.”
Votes on the reforms are expected when the House of Representatives meets Friday. It’s unclear whether they will find support in the Senate.