The House of Representatives will be back in session today and will vote on a bipartisan proposal to overhaul the Paycheck Protection Program (PPP). The bill is very friendly to businesses who have received PPP funds and gives businesses increased flexibility with regard to how funds can be spent. The House bill, H.R. 7010, gives businesses 24 weeks in which to spend PPP funds -- a dramatic increase from the current requirement that businesses spend PPP funds within 8 weeks. Also, the bill was revised last night to allow a borrower to receive forgiveness so long as at least 60 percent of the loan covers payroll costs. The other 40 percent can subsequently be used on mortgage interest, rent, or utility payments. Before last night’s change, the bill entirely eliminated the payroll threshold percentage. However, the current version of the bill still gives those who have received PPP loans greater flexibility.
U.S. Senator Rob Portman (R-OH) recently proposed the idea of providing unemployed workers a $450 weekly bonus if they return to work. This proposal is an alternative to Democrats’ efforts to continue paying $600 in weekly unemployment benefits in addition to state benefits. The White House appeared to support Senator Portman’s proposal on Tuesday when Larry Kudlow, Director of the United States National Economic Council, expressed support for the idea of a return to work bonus.
Last week, 2.1 million workers filed jobless claims. While this reflects a downward trend from the last several weeks, these are still record numbers. Since March, more than 40 million people have sought unemployment assistance. As states begin to reopen, there is a new problem that those on unemployment assistance can earn more than they would if they returned to work. According to a study by the University of Wisconsin, approximately 40 percent of all workers could earn more money while unemployed than by returning to their previous job. This undoubtedly has the potential to slow any economic recovery and the issue is being debated on Capitol Hill.
America’s Recovery Fund Coalition, a group representing trade associations and businesses through the COVID-19 recovery, found that more than two million small businesses could be broke and at risk of closure next month. The group is urging Congress to dispense grants to the business community as opposed to forgivable loans to assist with cash flow problems.
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