By Tonda Rush, General Counsel, National Newspaper Association
Congress has passed the Paycheck Protection Program Flexibility Act of 2020, HR 7010, a bill supported by the National Newspaper Association. The President is expected to sign the bill today and to put it into immediate effect.
Here is what the bill does:
• Allows borrowers to spend their funds over 24 weeks from the date they received their loans, instead of requiring all funds to be spent by June 30.
• Allows up to 40% (previously 25%) of forgivable loans to be used for the allowable nonpayroll expenses: rent, mortgage interest, utilities, interest on prior SBA loans.
• Sets a Dec 31, rather than June 30, deadline for rehiring employees to achieve full FTE complements from the baseline.
• Extends the period for paying back any unforgiven portion of loans to five years, rather than two years.
The bill applies only to the period for spending the funds. No new applications will be accepted after June 30, 2020. Money remains available for businesses that have not yet applied. Majority Leader Mitch McConnell said the Senate is committed to replenishing funds if the money runs out before June 30.
The bill also does not change the categories of allowable spending for forgivable loans and it does not address the deductibility of payroll and other covered expenses. Senate leaders in their floor statements on June 3 said they are committed to continuing to work on other legislation to fix flaws in the program.
The bill also does not make clear whether a business may opt to wrap up its spending period and apply for forgiveness before Dec. 31. NNA expects further information on this option from the Treasury Department shortly.
NNA praises prompt congressional action on Paycheck Protection Program Flexibility Act of 2020
The National Newspaper Association, the nation’s oldest organization of community newspapers, praised Congressional leaders for quickly adopting needed changes in the Paycheck Protection Program Act. The Senate on June 3 agreed to HR 7010, which provides borrowers with loosened rules for keeping the small businesses open during the coronavirus pandemic with small business loans.The new rules provide businesses with an extended period for using their funds and gives them a wider berth for spending on rent and utilities. It does not extend the June 30 deadline for applying for the loans.
NNA President Matt Adelman, publisher of the Douglas (Wyoming) Budget, said the flexibility would be valuable, particularly for publishers who received their loans late in the application period. He thanked key Congressional leaders, including Reps. Dean Phillips, D-MN; Chip Roy, R-TX; and Sens Marco Rubio, R-FL; Ben Cardin, D-MD, for their persistence in bringing PPP issues to their respective chambers.
“This is a tremendously helpful program. Many community newspapers have managed to keep their doors open and continue to publish because of the PPP act. But in hastily enacting it, Congress made the rules a little too tight to be as useful to businesses as they needed to be. Some businesses have high rent, for example, or had layoffs or resignations for reasons other than the pandemic. Many need to be able to efficiently use the money beyond the 8-week window Congress originally provided. As NNA reminded Congress in the past month, it doesn’t do either the economy or the community much good to spend the $510 billion paid out in this program if the final result is that businesses have to close in July and August because they are out of money.
“The tight rules were not the only flaws in this program. Congress also needs to make clear that payroll and other essential operating expenses are deductible so Uncle Sam doesn’t end up just taking the money back next April. Allowing printing and production expenses to be covered also would toss a lifeline to the community newspapers that have so bravely continued to cover this national crisis. NNA is pleased that Congress is hearing us and we thank our senators and representatives who have taken the time to listen to our needs.”
Passage of the bill was held up for several days while a group of senators, whose spokesman was Sen. Ron Johnson, R-WI, objected to some provisions in the bill. In his floor statement, Johnson said he supported the aims of the PPP loans but wanted to guarantee that no new loans were given after June 30, even if the spending period were extended. He and his co-sponsors, including Sen. Ben Cardin, D-MD, agreed to address the extension issue by sending a letter to the Small Business Administration and the Department of Treasury to make sure the lending period closed on June 30.
Adelman said NNA’s efforts on behalf of community newspapers to direct Congressional attention to the difficult plight of locally-owned newspapers during the pandemic would continue.
“This has been a trying, but also an exhilarating time. Our industry has come together to work on many concerns and we are hearing from members of Congress that they do support their local newspapers. NNA offers itself as a resource to answer questions that Congress may have about community newspapers and the small towns, neighborhoods and rural areas that they serve,” he said.