Pappas Proposes Recommendations to Fix PPP for NH Small Businesses
In a letter to House Leadership, Pappas calls for reforms to ensure that this critical small business lending program is better tailored to meet the needs of Granite State businesses
Drawing on conversations with hundreds of business leaders from across New Hampshire over the past two months, Congressman Chris Pappas (NH-01) proposed recommendations to help ensure that the Payroll Protection Program (PPP) will more effectively serve the needs of Granite State small businesses.
PPP provides small businesses with zero-fee loans of up to $10 million and allows up to 8 weeks of average payroll to be forgiven for businesses that retain their employees. Although this program has helped thousands of Granite State business owners and workers, its rules have rendered PPP impractical for many small businesses in the state.
In response, Pappas urged Speaker Nancy Pelosi and Republican Leader Kevin McCarthy to make changes to the program, including granting small businesses the ability to renew their PPP loans, offering businesses greater flexibility to determine when the program's loan forgiveness period will begin, and allowing small businesses more latitude to use PPP funding to meet their individual needs.
"These urgent recommendations are drawn from calls, letters, emails and conversations with hundreds of Granite State small business owners and workers," Pappas wrote. "If we are to maximize the PPP's potential to deliver real relief to our constituents, we must ensure that the program is better tailored to address the economic conditions they are facing. At this precarious moment for our country, it is critical that we come together across party lines to make PPP more flexible, more generous, and more responsive to the needs of Main Street businesses."
Pappas's letter to congressional leaders is available here and below.
Dear Speaker Pelosi and Leader McCarthy:
May 8, 2020
The Honorable Kevin McCarthy Minority Leader
United States House of Representatives The Capitol
Washington, DC 20515
I appreciate your commitment to providing meaningful relief to America's hard-hit Main Street
economy. While the Payroll Protection Program (PPP) represents a powerful tool to help struggling small businesses, I continue to hear from New Hampshire small business owners and workers that some of the program's well-intentioned rules unfortunately make PPP an ineffective or impractical option for them at this time.
In light of worsening economic conditions and growing uncertainty over when and how our Main Streets will be allowed to reopen, I strongly urge you to consider the following changes to PPP to offer greater flexibility and more targeted support to small businesses:
Currently, under PPP the amount of loan forgiveness available is based on a small business's payroll costs over a single 8-week period beginning on the date of loan disbursement. Recognizing that the economic recovery could be protracted and painful and that it may be months before growth returns to pre-pandemic levels, businesses should be given the option to repeatedly renew their PPP loans until economic conditions improve.
Instead of automatically starting once funds are disbursed, small businesses should be allowed greater flexibility to determine when the forgiveness period will begin. For example, for many hospitality and restaurant businesses, bringing staff back now in order to qualify for PPP loan forgiveness may not be sensible from either a financial or a public health perspective. More businesses will be able to take advantage of loan forgiveness if the covered period is better timed to coincide with when they are finally able to fully reopen and ramp up operations.
At present, in order to be eligible for forgiveness, a small business can allocate no more than 25 percent of PPP loan proceeds to non-payroll expenses. Given that many Granite State small businesses continue to face high overhead costs and relatively low payroll expenses, this threshold should be raised by at least 15 percent to provide these businesses with much-needed flexibility to meet their individual needs.
These urgent recommendations are drawn from calls, letters, emails and conversations with hundreds of Granite State small business owners and workers. If we are to maximize the PPP's potential to deliver real relief to our constituents, we must ensure that the program is better tailored to address the economic
conditions they are facing. At this precarious moment for our country, it is critical that we come together across party lines to make PPP more flexible, more generous, and more responsive to the needs of Main Street businesses.
Thank you for your attention to these requests. Sincerely,
Chris Pappas
Member of Congress