Small business owners may get a second bite at the coronavirus relief apple under proposed legislation that would extend the Paycheck Protection Program.
The Prioritized Paycheck Protection Program (P4) Act would allow businesses with fewer than 100 employees to apply for a second loan if they have used up (or are on pace to exhaust) their first PPP loan and can show a 50% loss in revenue due to the COVID-19 pandemic.
Democrats have introduced Senate and House versions of the bill, which has bipartisan support.
“Congress must once again act urgently to support our most vulnerable small businesses through this crisis, so our economy can recover as quickly as possible after the pandemic, said Maryland Democrat Sen. Ben Cardin, a co-sponsor of the bill.
Congress has provided $659 billion for the PPP, the centerpiece of the $2 trillion CARES Act. It offered partially forgivable loans to small businesses to cover payroll costs for eight weeks.
But lawmakers say small businesses are still struggling because the COVID shutdown has lasted longer than originally anticipated when Congress put together the PPP.
“It’s become clear that many employers in vital sectors need more federal aid through the Paycheck Protection Program,” Sen. Chris Coons, a Delaware Democrat, said.
The P4 bill would set aside the lesser of $25 billion or 20% of PPP funds for employers with fewer than 10 employees and businesses in underserved and rural communities. It also directs the Small Business Administration to issue guidance to lenders to give priority to the smallest businesses.
Publicly traded companies would not be eligible and hospitality and lodging businesses with multiple locations would be limited to an aggregate loan amount of $2 million.
Kevin Kuhlman, vice president of federal government relations for the National Federation of Independent Businesses, said the 50% revenue loss provision could be a problem for many small businesses.
“If a business has had 25 percent or 30 percent revenue loss and they have high fixed costs or accounts payable, then they’re going to be struggling as well,” he told Yahoo Finance.