Last updated on May 9, 2020
WASHINGTON— U.S. Senator John Cornyn (R-TX) sent a letter last week to Secretary of the Treasury Steven Mnuchin and Administrator of the Small Business Administration (SBA) Jovita Carranza urging changes to the loan forgiveness criteria of the Paycheck Protection Program (PPP) loans to help small businesses and particularly restaurants, which tend to have lower payroll expenses, use the program to stay afloat during the pandemic. Specifically, the Senators recommended the loan forgiveness requirement that 75% of the loan be spent on payroll (with 25% allowed to be spent on other expenses), be reduced to 50% or lower.
“The 25 percent threshold is problematic for several business sectors, especially those whose mortgage, rent, or utility payments constitute a large portion of fixed monthly expenses,” the Senators wrote. “If they are unable to cover these expenses, they will have to decide between keeping their doors open, at personal financial risk, or closing shop and laying off employees. These are businesses that will not recover. Such an outcome would result in mass layoffs that would shift more Americans onto unemployment, presenting significant long-term costs to families, businesses, and states.”
“We ask that you exercise the power of your respective offices to ensure all business sectors are able to spend at least 50 percent of the loan proceeds on the statutorily allowed non-payroll expenses. Access to loan forgiveness was a critical component of the CARES Act, and making it as effective as possible will help further the CARES Act’s goal of supporting small businesses while keeping American workers employed.”
Joining Sen. Cornyn on the letter were U.S. Senators Robert Menendez (D-NJ), John Barrasso (R-WY), Dick Durbin (D-IL), Marsha Blackburn (R-TN), Chris Van Hollen (D-MD), John Boozman (R-AR), Chris Coons (D-DE), Lindsay Graham (R-SC), Richard Blumenthal (D-CT), James Lankford (R-OK), Michael Bennett (D-CO), Cory Gardner (R-CO), Kirsten Gillibrand (D-NY), Kelly Loeffler (R-GA), Kyrsten Sinema (D-AZ), Roger Wicker (R-MS), Ron Wyden (D-OR), Rob Portman (D-OH), Patrick Leahy (D-VT), and Cory Booker (D-NJ).
Sen. Cornyn launched a series of statewide outreach calls with small businesses, healthcare workers, nonprofits, local municipalities, agricultural groups, trade associations, and other Texans on March 6. His website has additional resources for Texans during the coronavirus outbreak here.
Sen. Cornyn also introduced the Small Business Expense Protection Act today, which would clarify that small businesses can deduct expenses paid with a forgiven PPP loan from their taxes.
You can read the full letter here.
