U.S. House passes small-business aid bill introduced by Minnesota’s Dean Phillips

May 28, 2020
In The News

With only a single vote in opposition, the House of Representatives on Thursday voted to amend the Paycheck Protection Program (PPP) to extend repayment deadlines and loosen some of its spending rules.

The legislation offered by Rep. Dean Phillips, a Democrat who represents the western Twin Cities suburbs — aided by Rep. Chip Roy, a Texas Republican — aims to make the program more flexible for those who need it to stay in business and fully staffed during the COVID-19 pandemic. It passed 417-1, with 13 House members, all Republicans, not voting.

The bill now heads to the Senate, which has not yet determined a hearing date. But its virtually unanimous bipartisan support in the House, as well as the blessing of 55 major trade groups and many small-business owners, give it a rare level of political leverage as the country tries to repair economic damage caused by the pandemic.

Phillips, the bill's chief sponsor, teamed with Roy in a national campaign to show how restrictions and time limits on spending PPP funds led to confusion and anxiety among small businesses that were supposed to benefit from the program. PPP makes low-interest loans up to $10 million that can be forgiven if companies meet spending criteria.

Phillips called the vote an example of the cooperation he hoped to bring to Washington.

"You convert what you hear [from constituents] into action," he said. "Chip Roy is one of the more conservative members of Congress, but we found intersections where we agreed."

Given the "extraordinary bipartisan support" in the House, Phillips added, "I would be both surprised and disappointed if the Senate didn't pass this immediately and get it to the president."

Originally, companies had to spend 75% of their PPP money to pay workers with the rest going to rent, mortgages or utilities. Businesses that received the loans had eight weeks to spend the entire amount in order to have the loan forgiven.

The Paycheck Protection Program Flexibility Act passed Thursday removes the 75% payroll-spending restriction and extends the period for spending PPP funds from eight to 24 weeks in order to qualify for forgiveness. PPP recipients are allowed to defer payment of payroll taxes to the government. The bill also allows employers more time to rehire workers laid off because of the pandemic, another requirement to have PPP loans forgiven.

Businesses with fewer than 500 employees qualify for PPP funds administered by the U.S. Small Business Administration.

The first tranche of $350 billion in forgivable loans was gobbled up in two weeks.

But the second round of funding has lagged as businesses shut down by bans on group gatherings, such as restaurants, fretted over their inability to rehire and pay employees because their businesses were not operating.

Businesses that were open but suffering, such as hotels, needed to cope with massive amounts of lost business.

These and other members of the hospitality industry told Phillips they needed money to pay rent or mortgages in order to survive and eventually rehire workers.

Stephanie Shimp, owner of the Blue Plate Restaurant Co., which operates in Minneapolis, St. Paul, Edina and Maple Grove, has a seven-figure PPP loan that likely would not qualify for forgiveness under current PPP rules.

"Given that I operate a business that is forced to be closed, the [original] program didn't work for me," she explained. "I'm not going to be able to hire back 100% of my staff by June 30, and a business like mine is not in a position to take on more debt."

The bill, she said, "gives me a fighting chance to save my business."

Other businesses didn't bother to apply because PPP rules made it impossible to pay bills necessary to stay in business.

Jason Admonius, owner of Monie's bar and grill in Maple Plain, said limiting payments for rent, mortgages and utilities to just 25% was "next to nothing" the way his business is structured.

As billions of dollars went undistributed, Phillips and Roy devised a bill flexible enough to get the money to those for whom it was intended.

In urging colleagues to support the bill, Phillips quoted correspondence from six separate Minnesota small-business owners.

PPP rules that make it all but impossible to meet the terms of loan forgiveness hurt more than they help, said the owner of a string of pizza shops.

"If the PPP loan is not forgiven," the owner told Phillips, "we do not foresee our business returning to any meaningful positive cash flow until a vaccine is developed or the virus impact weakens."

Those kinds of stories helped attract bipartisan support for Phillips' bill within the Minnesota House delegation. Republican Rep. Pete Stauber and Democrats Angie Craig and Betty McCollum became cosponsors.

The entire delegation voted for the legislation.