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May 27, 2020 02:50 PM

Trade groups ask for changes to small-business loan program

Audrey LaForest
Automotive News
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    A broad coalition of national trade groups sent a letter last week to congressional leaders asking for changes to the Small Business Administration's Paycheck Protection Program that would provide more flexibility to participating small businesses.

    In the letter, sent May 21, the groups called for "emergency legislative and administrative action" to repeal the program's requirement that 75 percent of the loan be used to cover payroll costs and 25 percent be used to cover mortgage, rent and utilities during an eight-week period.

    Additionally, the groups—including the Tire Industry Association, American Mold Builders Association, National Automobile Dealers Association and the American International Dealers Association—are asking for an extension of the eight-week period that the funds must be spent to qualify for loan forgiveness and for an extension of the June 30 safe-harbor date for rehiring workers and restoring salary levels.

    "These steps would conform the PPP with the reality of the gradual reopening now occurring across the United States and would help ensure that more small businesses remain in operation," the groups said in the letter.

    The signing of this letter marks just one of the efforts by TIA to support its members and help them navigate the difficult circumstances that the COVID-19 pandemic has brought.

    “In these difficult and uncertain times, we continue to take part in joint efforts made by our association and others to provide much needed support to businesses impacted by this unforeseen crisis," TIA CEO Roy Littlefield said in a statement. "This effort is one of many that TIA is involved with that would provide some form of relief.” 

    The House is expected to vote this week on a bipartisan bill that would allow loan forgiveness to extend beyond the eight-week period and enable businesses to have the flexibility to spread loan funds over the full course of the COVID-19 crisis. It also would get rid of restrictions limiting nonpayroll expenses to 25 percent of the loan proceeds and would allow businesses that make a good faith effort to rehire employees, but are unable to, to still receive loan forgiveness.

    The Senate last week failed to adopt a similar bill.

    "The current rules made sense when the program was created, and it was anticipated that stay-at-home orders would last only a few weeks. However, their implementation in the current environment is making it harder for small businesses to survive," the groups said. "Small businesses that close permanently will never be able to rehire their employees."

    The Paycheck Protection Program is part of the $2.2 trillion coronavirus relief package known as the Coronavirus Aid, Relief and Economic Security Act. The program, as of May 23, has approved approximately 4.4 million loans, totaling more than $511 billion from 5,511 lending institutions.

    "As the COVID-19 crisis stretches into the summer months, auto retailers need flexibility in order to continue to pay their employees, meet operating expenses and serve their communities," AIADA said in an emailed statement to Automotive News.

    "We are asking Congress, the Small Business Administration and the Department of Treasury to amend PPP rules to allow participants to adjust to current market conditions," the association said. "These relatively small changes would make a big difference in how auto retailers in particular are able to comply with an orderly, phased reopening."

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