Kerrigan: PPP Reform Legislation Must Include Big Fix on Broken 75-25 Rule

By at 28 May, 2020, 9:59 am


For Immediate Release

Washington, D.C. – Today, the U.S. House is expected to vote on changes to the Paycheck Protection Program (PPP) in legislation introduced by U.S. Representatives Chip Roy (R-TX) and Dean Phillips (D-MN). While the original legislation, the “Paycheck Protection Flexibility Act,” included the repeal of the arbitrary 75-25 ratio for determining forgivable expenses, that key provision and several others, are currently being negotiated with the Senate. A compromise loan forgiveness ratio being floated, according to news reports, is 60-40. Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan said the final legislation being voted on needs to include a repeal of the 75-25 rule in order to save more small businesses, and therefore small business jobs.

“Allowing flexibility in forgivable expenses provides small business owners with the flexibility they need to protect their businesses and their workers. The intent of PPP is to protect paychecks, and eliminating this restrictive ratio aligns perfectly with the purpose of the program.”

Kerrigan also noted that a Small Business Administration (SBA) Office of Inspector General’s PPP Flash Report released on May 8 reported that the 75-25 rule “did not fully align” with CARES Act provisions.

SBE Council joined small business allies by signing a letter to Reps. Roy and Phillips on May 21 in support of the “Paycheck Protection Flexibility Act,” which would allow loan forgiveness for expenses outside of the eight-week period to 24 weeks, eliminate the restrictive 75%/25% rule on loan proceed use, expand loan terms beyond two years, ensure full access to payroll tax deferment for businesses that take PPP loans, and extend the June 30, 2020 rehiring deadline to respond to the workforce effects of enhanced Unemployment Insurance.

“Tweaks to the 75-25 PPP ratio won’t work for many small businesses. Small business owners have spoken loud and clear on the restrictive ratio. Congress and Treasury Secretary Mnuchin need to fully listen to small business America on this critical matter. A big fix to the 75-25 rule will save many more jobs,” added Kerrigan.

Karen Kerrigan, SBE Council president & CEO

SBE Council is nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For 25 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth. Visit @SBECouncil




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