President Trump Signs Spanberger-Backed Legislation to Reform Paycheck Protection Program, Cut Red Tape for Central Virginia Businesses into Law

In Response to Concerns from Small Businesses & Restaurants in Virginia and Across the Country, the Law Will Begin Fixing the Restrictive 75-25 Rule, Extend Rehiring Requirements, & Extend Loan Forgiveness Period

HENRICO, V.A. – On Friday, President Donald J. Trump signed legislation supported by U.S. Representative Abigail Spanberger to provide greater flexibility to Central Virginia small businesses and restaurants as they look to use Paycheck Protection Program (PPP) loans to cover critical expenses and build plans for reopening.

Just prior to the rollout of PPP last month, the U.S. Small Business Administration (SBA) introduced guidance that severely restricted non-payroll loan forgiveness for U.S. small businesses applying for PPP loans. This guidance explicitly required businesses to spend 75 percent of the PPP loan on maintaining payroll in order to receive loan forgiveness — a stipulation not included by Congress in the Coronavirus, Aid, Relief and Economic Security (CARES) Act. Additionally, under the SBA’s initial guidance, many small businesses unable to rehire employees by June 30, 2020 were threatened with reductions in their loan forgiveness.

To address these issues, Spanberger voted with an overwhelmingly bipartisan majority of the U.S. House last month to pass the Paycheck Protection Program Flexibility Act, which would ease these restrictions on PPP loan forgiveness. This legislation would make much-needed changes to the 75-25 rule by increasing the current limitation on nonpayroll expenses — such as rent, utilities, and insurance — for loan forgiveness from 25 to 40 percent of the total loan amount. Additionally, the bipartisan bill would extend the rehiring deadline from June 30, 2020 to December 31, 2020 and it would extend the covered period for loan forgiveness from 8 weeks to 24 weeks.

“Since the launch of the Paycheck Protection Program earlier this year, I’ve heard from Central Virginia small businesses and restaurants about burdensome restrictions imposed by the SBA that have restricted how they can use this assistance. As more Central Virginia businesses move toward reopening, we need to give them the flexibility to use these loans to respond to their individual costs and needs,” said Spanberger. “This legislation provides our area’s small businesses with additional freedom to make their own decisions, and these commonsense fixes will also provide greater certainty to the thousands of employees across our district who remain fearful about their finances amid a nationwide economic downturn. I’m encouraged that the House, Senate, and administration have found common ground on delivering relief to Main Street businesses, and I’ll keep striving to make PPP work for the people of Central Virginia as this crisis continues.”

Since the rollout of PPP earlier this year, Spanberger has been a leader in calling for the changes to the SBA’s guidance on the 75-25 rule, which requires more than 75 percent of PPP loans to be spent on payroll. Just days after PPP applications opened, Spanberger led a bipartisan letter to Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza urging the administration to rescind this requirement. In the letter, Spanberger and her colleagues also called for additional loan forgiveness guidance to businesses unable to rehire their employees.

In April, Spanberger also led a bipartisan effort urging leaders in both parties to improve flexibility and cut red tape for American small businesses seeking federal assistance through PPP.


Since the COVID-19 pandemic began, Spanberger has worked to deliver immediate relief to Central Virginia small businesses, fix issues with PPP’s implementation, and keep the Seventh District’s employees on the payroll. In April, she led an effort calling on the administration to fix problems faced by community banks and credits unions related to the rollout of PPP.

Spanberger has also worked to bring greater transparency to federal small business loan assistance during the pandemic. Last month, she helped introduce the TRUTH Act, which would direct the SBA to explain and justify all disbursements of coronavirus relief loans of more than $2 million. And following widespread reports of publicly-traded companies hoarding federal, taxpayer-funded PPP loans intended for small businesses, she pressed the administration to release important information about the decisions behind the implementation of PPP.

Soon after the launch of the PPP application, Spanberger urged the SBA and participating lenders to make sure these funds were delivered to Central Virginia businesses, sole-proprietorships, and self-employed individuals in the most efficient and expedient way. She also sent a letter to Secretary Mnuchin and SBA Administrator Carranza expressing her strong concerns about the PPP’s shaky rollout and its consequences for small businesses needing financial assistance during this crisis. Additionally, she called on the administration to provide additional guidance to PPP lenders that would clarify eligibility requirements and encourage lenders to provide PPP loans to all eligible businesses.


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