Rep. Dean Phillips proposes changes to PPP loan requirements
Washington, DC, May 17, 2020 | Minneapolis St. Paul Business Journal
U.S. Rep. Dean Phillips, D-Minn., thinks the U.S. Small Business Administration's Payroll Protection Program has good intentions, but it needs some tweaks.
The roughly $670 billion loan program offers forgivable loans if they're spent appropriately, requiring that 75% of the money be directed toward payroll, while the remainder can be spent on mortgage interest, rent and utility costs during the eight weeks after the loan is disbursed.
That timeline is one of Phillips' biggest concerns. Many owners of businesses that were forced to close by stay-at-home mandates, such as restaurants and retailers, say they can't start meeting that payroll requirement until they're allowed to reopen.
Phillips recently introduced legislation along with U.S. Rep. Chip Roy, a Republican from Texas' 21st district, that would:
Congress is debating another fund of stimulus money, dubbed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, that would include some of these measures, but that bill, which passed the House on Friday, faces stiff opposition from Senate Republicans.
Late Friday, Phillips announced he received a commitment from Congressional leadership to vote on his bill. Will it actually pass? Phillips couldn't say.
"The way things work in Washington makes it a tough to answer," he said in an interview. "Our hope is try and get 290 cosponsors so it is not subjected to the leadership bottleneck."
If Phillips had to choose one change to the PPP rules, he'd lengthen the eight-week window in which the money can be used, though he thinks the Treasury Department could've instituted that change.
"That is the issue that is front and center," he said. "I'm frustrated. The Treasury Department could've modified some of the rules, I believe."
Phillips said he's pushing for these changes because he's heard anecdotally from businesses in the Third District, which he represents, that they are having difficulty spending the money in the allotted timeframe or using it for the intended purposes.
He also said thinks some of the issues with PPP loans stems from members of Congress typically not having much private-sector experience. Phillips is the former CEO of Phillips Distilling Co.
"There are a handful in Congress that have business experience," he said. "I would argue not enough."