FIX PPP: Letter to Congressional Leaders on Prioritizing PPP Updates and Changes

By at 4 May, 2020, 9:24 am

The Honorable Mitch McConnell                     The Honorable Chuck Schumer

U.S. Capitol Building, S-230                            313 Hart Senate Office Building

Washington, D.C. 20510                                  Washington, D.C. 20510


The Honorable Nancy Pelosi                            The Honorable Kevin McCarthy

U.S. Capitol Building, H-232                             U.S. Capitol Building, H-204

Washington, D.C.  20510                                  Washington, D.C.  20510


Dear Leader McConnell, Speaker Pelosi, Leader Schumer, Leader McCarthy,

On behalf of the Small Business & Entrepreneurship Council (SBE Council), thank you for your work during this challenging and unprecedented period of time. As you well know, the impact of COVID-19 has shocked the small business community, and many small firms have been deeply wounded – many permanently – by the economic blow of stay-at-home and shut down orders.

Government policies and programs advanced to help small businesses weather the COVID-19 economic storm must be as practical, relevant and flexible as possible to ensure they align with the needs of the diverse array of business models and firms that make up the small business economy. The Paycheck Protection Program (PPP) is already due for changes, and SBE Council firmly believes that key reforms will make this important program more effective for our economy, its workers and small businesses.

The capital provided by PPP must be put to its best use in order to salvage as many small businesses and jobs as possible. SBE Council has listened to its members and thousands of small business owners over the past month or more. We strongly urge Congress to advance the following updates to PPP, which will align the program with the current needs of small businesses and economic conditions on the ground:

Extend the June 30 “Covered Period”: It is no fault of PPP’s sponsors that deadlines – in this case the June 30 “covered period” – was put into the legislation. The cascading economic effects of COVID-19, due to shut-down and stay-at-home orders, evolved daily and most believed that the virus and its effects would be “short-term.” It is obvious now that the road to economic recovery will be longer and slower. Therefore, the covered period for the program, which ends on June 30, must be extended and ideally to December 31, 2020. Extending the deadline means small businesses will be able to on-ramp employees after June 30 (to be eligible for loan forgiveness) and at a pace that aligns with demand.

Provide Greater Flexibility in the 8-Week Window: Once PPP money hits the bank account of a small business, an 8-week shot clock for loan forgiveness begins. That means small businesses must bring employees back immediately after receiving their loan, even if weak business revenue during this period will not sustain this payroll and business for the longer term. This includes loan forgiveness for “covered expenses.” Congress must allow small businesses more flexibility for this loan forgiveness period, and extend the period to at least 24 weeks.

Change the Arbitrary 75-25 Rule: This rule, created and published by U.S. Treasury and SBA, caps non-payroll costs associated with PPP loans at 25% of total forgivable expenses. When published, it was an unexpected and very disappointing development for small business owners. This one-size-fits-all ratio, which was not in the PPP legislation, is inappropriate for many types of Main Street businesses, micro-manufacturers, the self-employed, businesses in high-cost (high-rent) areas of the country and firms whose largest expenses are rent, utilities and other related essential costs of keeping these businesses open.  Loan forgiveness needs to be provided for all allowable payroll and non-payroll expenses during the 24-week window. There was no ratio placed on allowable forgivable expenses mandated by Congress in the legislation, and the 75-25 rule must be lifted.

Expand What is Forgivable in Non-Payroll Costs: There are other expenses incurred by small businesses outside of the list that have been deemed forgivable in the PPP legislation (rent, utilities, mortgage interest, etc.) but are essential to operation of a small business, particularly now.  A glaring omission is the cost of technology and critical tools related to maintaining and scaling up the digital infrastructure needs of small businesses. The use of digital platforms, business software and cloud services has only ramped up for small businesses in order to enable work-from-home arrangements, supporting or shifting to e-commerce operations to drive revenues in order to survive, processing payroll and more. These related expenses, and software leasing and licensing costs, make sense to include as essential expenses, therefore forgivable.

Entrepreneurs are working hard to grind it out and are doing everything possible to salvage their businesses. It is heartbreaking to hear their stories, especially the ones who tell me their businesses will not survive.  Making the above changes and updates to PPP will improve the chance of survival for small businesses that have received PPP capital. Thank you for your leadership, and attention to this critical matter.


Karen Kerrigan, President & CEO



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