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June 3, 2020, 6:50 p.m. EDT

McConnell, Rubio support House bill changing Paycheck Protection Program, but other Senate Republicans raise concerns

Measure would extend the period for using loans to 24 weeks and let borrowers spend just 60%, rather than 75%, of their loan proceeds on paying workers

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By Victor Reklaitis, MarketWatch


Getty Images
A woman wears a mask as she walks last month through a food court at a mall in Florida.

Some key Senate Republicans are throwing their support behind a bipartisan House bill that would give small businesses more time to use Paycheck Protection Program loans and let borrowers spend less of their loan proceeds on payroll, but other GOP senators have concerns about the measure, potentially preventing swift action on it.

The Paycheck Protection Program Flexibility Act, which passed the Democratic-run House last week with near-unanimous support, makes changes to the PPP that include extending the period for using loans to 24 weeks from eight weeks. It also would let borrowers spend just 60%, rather than 75%, of their loan proceeds on paying workers and still be eligible for loan forgiveness.

The bill’s supporters have emphasized that small businesses need more flexibility in how they can use the PPP’s emergency loans. Its backers now include Senate Majority Leader Mitch McConnell, the Kentucky Republican, and Republican Sen. Marco Rubio of Florida, who chairs the Senate Committee on Small Business and Entrepreneurship.

“I hope and anticipate the Senate will soon take up and pass legislation that just passed the House by an overwhelming vote of 417-1 to further strengthen the Paycheck Protection Program so it continues working for small businesses that need our help,” McConnell said Monday in a speech on the Senate floor.

Rubio said Monday that he will support the House bill in the Republican-run Senate because “it’s better than not doing anything.” But he added that “people need to know that the way the Treasury has told us they are going to interpret that bill — if you don’t spend 60% of your money on payroll, if you only spend 59.9%, you will get zero forgiveness.”

“There’s some issues with it that are going to cause people problems, and I just want everybody to know that ahead of time,” Florida’s senior senator also said. “I think still we’re better off passing it than not passing it.”

On Tuesday, Rubio said two Republican senators, Wisconsin’s Ron Johnson and Utah’s Mike Lee, were holding up quick Senate action on the House legislation because they want the PPP to expire in August rather than December. That’s “not an unreasonable request,” but “procedurally, the problem is if we change the House bill, we’ve got to send it back then,” Rubio said. Johnson wrote in a Wall Street Journal op-ed on Sunday that he’s “not opposed” to the extension to 24 weeks, but it’s not the only change that’s needed in the program.

Senate Democratic Leader Chuck Schumer attempted to pass the bill on the Senate floor Wednesday afternoon by asking for unanimous consent, but Johnson objected. Johnson said he wanted to insert a letter into the Congressional Record from the chairmen and ranking members of the House and Senate committees that deal with small businesses clarifying lawmakers’ intent for the bill, a step that would allow the bill to be approved in the Senate without making any text changes that would require it being sent back to the House for another vote.

Such a letter would also provide a legal basis for the administration or courts to cite in disputes about the program’s operations. Johnson said he hoped the clarifications he wanted could be cleared up later Wednesday or by early Thursday, allowing for a successful unanimous consent passage in the Senate.

“Multiple members are opposed for different reasons,” GOP Sen. John Thune of South Dakota told CNN on Tuesday, as he suggested that fast-tracking the legislation this week didn’t look likely.

Rubio and his allies tried on May 21 to pass their own bill in the Senate that would ease PPP terms, but the effort failed.

An earlier version of the House measure completely eliminated the 75% rule, in line with what hotels, restaurants and other industry groups have lobbied for , but labor unions objected and the bill was changed to have a 60% rule.

The PPP was established in late March to help small businesses and nonprofits hurt by the coronavirus crisis. It has received $670 billion in funding through March’s $2.2 trillion CARES Act and April’s $484 billion relief package. There have been $510 billion in PPP loans approved as of Saturday, according to Small Business Administration figures .

The program has drawn criticism over how public companies scored loans, as well as over sending money to less hard-hit areas and allegedly discriminating against businesses owned by women and minorities. A Reuters report on Tuesday said a technical snafu caused many PPP borrowers to receive loans twice or more, estimating that there were at least 1,020 duplicate deposits issued and the overall amount involved could be roughly $116 million.

U.S. stocks /zigman2/quotes/210599714/realtime SPX +1.58% /zigman2/quotes/210598065/realtime DJIA +2.13% are trading well below their February peaks after the coronavirus pandemic forced the shutdown of businesses and travel, but they have rallied from their March lows thanks in part to optimism around Washington’s aid efforts. The S&P 500 and Dow industrials gained Wednesday.

This is an updated version of a report first published on June 2, 2020.

Jonathan Nicholson contributed to this report.

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Victor Reklaitis is MarketWatch's Money & Politics reporter and is based in Washington, D.C. Follow him on Twitter @VicRek.

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