Spanberger Votes to Pass Bipartisan Reforms to Paycheck Protection Program Rules, Cut Red Tape, & Improve Flexibility for Central Virginia Small Businesses as they Move Toward Reopening

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

WASHINGTON, D.C. – U.S. Representative Abigail Spanberger today voted 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 federal loan forgiveness percentage. According to Central Virginia small businesses owners, these restrictions have hamstrung local businesses with higher non-payroll costs, and they’ve stifled their ability to adapt the loans to best suit the unique challenges faced by their individual businesses during the coronavirus crisis.

To address these issues, Spanberger voted with an overwhelmingly bipartisan majority of the U.S. House to pass the Paycheck Protection Program Flexibility Act, which would ease these burdensome 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.

“Through calls, emails, virtual roundtables, and telephone town halls, I’ve heard from hundreds of Central Virginia businesses and restaurants about PPP implementation issues. For small businesses and independent restaurants, the so-called ’75-25’ rule has been particularly onerous. As Central Virginia PPP recipients now prepare to apply for critical loan forgiveness, we need urgent reforms to PPP loan forgiveness rules that will respond to the needs of our communities on the ground,” said Spanberger. “This bipartisan bill would give Central Virginia’s small businesses and restaurants much of the flexibility they need to cover their expenses and keep their doors open. Through commonsense improvements to PPP loan restrictions, this bill would give our business owners additional freedom to make their own decisions as they contribute to the Commonwealth’s economic recovery. Our district’s thousands of small businesses have waited long enough for changes to PPP, and the Senate should now move quickly to send this legislation to the President’s desk.”

Since the rollout of PPP last month, 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, emphasizing how this rule does not allow small businesses the appropriate flexibility to use the loan to respond to their individual needs. In the letter, Spanberger and her colleagues also called for additional loan forgiveness guidance to businesses unable to rehire their employees.

Last month, 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. Last month, 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. Earlier this 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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