Opinion

Congress Should Make PPP-Loan-Forgiveness Window Flexible

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Posted: May 29, 2020 12:01 AM
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Congress Should Make PPP-Loan-Forgiveness Window Flexible

Source: AP Photo/J. Scott Applewhite

It’s been the privilege of my life so far to own and operate HT Metals in Tucson, Arizona. Since opening our doors in 2003, we’ve supplied area machine shops with the raw materials they need to bring clients’ ideas to life while strengthening our manufacturing industry here in the U.S.


After the president signed the Tax Cuts and Jobs Act into law three years ago, my firm experienced explosive growth and what started out as a one-man show morphed into a five-person team, and I’d like to keep it that way.


In order to do that, though, Congress should reform the “Paycheck Protection Program (PPP), which provides government-backed loans to small business owners like me to weather the economic downturn caused by the pandemic.


PPP lets small business owners apply for a loan equal to 250 percent of monthly payroll or $10 million, whichever number is less. As it stands now, recipients have an eight-week window in which their PPP money is eligible for forgiveness if the money is used to retain employees and keep the lights on. The eight-week clock starts when small businesses receive their loan.


As stay-at-home orders drag on, however, and reopening is gradually phased in, many small businesses are quickly coming up on their eight-week loan forgiveness deadline. 


For example, here in Arizona, while Governor Ducey recently lifted his stay-at-home order, he is keeping the state in the first reopening phase. This phase, among other things, encourages Arizonans to continue limiting non-essential travel, limit gatherings to 10 people or fewer and maintain social-distancing guidelines.

Arizona’s phase-one reopening, while necessary for health and safety, is putting a strain on small businesses and our ability to make money. This, in turn, makes it difficult to keep staff on payroll.  In many other states, small businesses remain closed as “stay-at-home” orders remain in effect. Even some small businesses allowed to begin reopening aren’t yet fully operational.

Meanwhile, in Arizona and across America, many small-business owners have been forced to close their doors permanently. As many as 100,000 small businesses—even with the forgivable-loan program in place—have shuttered permanently because the financial toll sustained as a result of lockdowns, according to a recent study conducted by researchers from Harvard Business School and the University of Chicago.

“Small businesses employ almost fifty percent of American workers. Yet, our results underscore the financial fragility of many small businesses, and how deeply affected they are by the current crisis,” reads the report.

The small businesses still standing need all the help they can get. Congress should afford small-business owners the loan-forgiveness flexibility they need.

One bill that would do exactly that was passed by the House on Thursday. The bipartisan PPP Flexibility Act would expand the loan forgiveness period from eight weeks to 24 weeks, reduce the requirement that 75% of the loan be spent on payroll to 60%, and extend the program through the end of this year. While not perfect, this bill will save millions of jobs and help our markets recover the losses they’ve sustained. The Senate is expected to vote on a very similar bill next week.

The House and Senate should come together on final legislation as soon as possible. The sooner a bill can get to the President’s desk, the better it will be for small business owners like me. The entire small business community – employers and employees – is depending on it. 

Carlos Ruiz is president and CEO of HT Metals in Tucson, Arizona and past chairman of the Tucson Hispanic Chamber of Commerce board of directors. He is a member of Job Creators Network, a small business advocacy group.