House’s $ 3T HEROES Act would add $ 10 billion in EIDL grants and give PPP borrowers more leeway

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Although the Senate move could be a non-runner, the U.S. House of Representatives on Friday approved a COVID-19 relief bill that could help some garages take advantage of the popular paycheck protection program and disaster loan grant initiatives for economic injuries.

$ 3 trillion resolution 6800 was introduced on May 12 and passed 208-199 on Friday, just three days later. It seems unlikely to become law, given the opposition from both Senate Majority Leader Mitch McConnell, R-Ky., And the White House.

“It still reads like the House Speaker glued together some random ideas from her most liberal members and slapped the word ‘coronavirus’ over them.” said McConnell. “A dubious product of a dubious majority of the house.”

White House press secretary Kayleigh McEnany called this “totally unacceptable,” according to a White House transcript of a Friday press conference.

“This is not a Christmas tree,” said House spokeswoman Nancy Pelosi, D-California, according to comments from her office on the House floor. “There’s nothing nice about that. This is a very strategically planned law that is strictly tailored to meet the needs of the American people in relation to the coronavirus pandemic. Doing a little less would not be responsible. We could have done more, but we wanted to keep the costs under control.

“When you talk about the cost, you have to think about the lost opportunity. The Fed chairman advised us to think big. “It never gets cheaper,” he said, because interest rates are so low. The borrowing costs are so low. “

Even if that iteration of HR 6800 is dead in the water, elements that help small businesses like casualty repairers could survive in the spin-off legislation.

As Pelosi noted, the measure affects points that have already been supported by both parties. According to her office, she said on the floor of the house:

On March 28, the President of the United States signed the CARES Act, the first CARES Act. And that was a bill developed by the Republican leadership in the Senate. They made their proposal, we responded to it, responded to it and reached a bipartisan agreement.

The next bill, the preliminary PPP bill, was also developed by the Republican in the Senate. He made their proposal, we made our proposals, we negotiated, we submitted a bipartisan bill. Aren’t you proud that the House of Representatives has the same opportunity and privilege as the Republican leadership in the Senate to bring us laws in this terrible struggle?

And more than 80 percent of what is in this law has already received bipartisan support. We have agreed on state and local bills in other bills. We agreed to test in at least two other bills. We have agreed to support hospitals. We have agreed on unemployment insurance. We have agreed direct payments.

So much of what is in this law is in previous bipartisan laws. So we’re not asking people to do something they haven’t done yet.

EIDL scholarships

The HEROES Act provides an additional $ 10 billion in EIDL grants, $ 10,000 advances that small businesses applying for EIDL loans can get quickly – regardless of whether or not the applicant applies for the Loan is approved, waived. It also states that this allowance is not considered taxable income.

Congress funded the EIDL grant initiative with $ 10 billion under the CARES bill of March. It added an additional $ 10 billion during House Resolution 266 in April after small businesses weathered the first round of funding. However, the Small Business Administration hasn’t completely restarted the program since it was discontinued on April 15 after exhausting the first $ 10 billion. Instead, the agency said it is handling the remaining applications it received before the deadline on a first come, first served basis, only accepting new applications from agricultural companies.

PPP loan

The measure also gives small businesses more than eight weeks to spend their paycheck protection loans and get the debt forgiven; Recipients would have 24 weeks or December 31, whichever comes first. They would also have until December 31st instead of June 30th to reinstate employees and would still be entitled to full debt relief.

The CARES Act allowed companies to borrow 2.5 times the monthly payroll, or about 10 weeks of payroll, and have the SBA waive any loan dollars spent on payroll, mortgage interest, rent, or utilities during the eight-week period . The Small Business Administration says borrowers must spend 75 percent of the amount borrowed on payroll and the remainder on either payroll or the other approved expenses in order to qualify for forgiveness.

The new HEROES Act shortens the 75 percent requirement: “In performing this section, the administrator may not limit the non-wage portion of a forgivable covered loan amount.”

“This rule (the 75 percent rule of the SBA) was not the original intention of Congress when the PPP was founded, and many small businesses don’t have to spend 75 percent on payroll,” the Automotive Service Association wrote in a press release on Friday .

The bill also reflects the guidelines of the SBA that a company that fails to reinstate an employee during the period will not be penalized. It will also be used by employers who downsize and “can prove that they are on or before 31 December”.

The HEROES Act also mirrors another agency stating that PPP loans made do not count as gross income. This appears to have legislated at least part of the recent guidance from the IRS, which stated that PPP revenue would be treated as such, but avoiding a double diminution by preventing the deduction of related expenses. The bill also states that EIDL grants do not count as gross income.

PPP loans bear 1 percent interest and are due in two years according to the rules of the SBA. The HEROES Act would change the term to at least five years.

The HEROES Act also appears to encourage PPP loans to extremely small businesses, with wording such as stating that “Any amounts repaid to the Treasury Secretary due to the cancellation of a covered loan will be used solely for the cost of covered loans Guarantee beneficiaries “. Recipients with 10 or fewer employees. “

To be heard: You can find the contact details for the congress here.

More information:

Motor vehicle service association, May 15, 2020

Economic Disaster Grants website

Coronavirus Aid Options SBA Page

SBA Paycheck Protection Program (PPP) website

List of PPP lenders in your state

Pictures:

US House of Representatives Speaker, Nancy Pelosi, D-California, (Provided by the US House of Representatives)

Republican President Donald Trump signed the CARES law on March 27, 2020. (Provided by Trump)

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