Comparing Paycheck Protection Program Reform Proposals

By Robert Mangas on August 5, 2020

As Congress and the White House continue to negotiate the details of the next COVID-19 relief package, serious obstacles remain. Not only do the House-passed Heroes Act and the HEALS Act introduced in the Senate differ significantly in size from a spending perspective, but there are several competing policy areas within each bill that have major substantive differences. The table below outlines the primary differences in approach for one of those policy areas: extending the Paycheck Protection Program.

Comparing Paycheck Protection Program reform proposals

	House Heroes Act	Senate Heals Act
PPP reforms	Applications and covered period extended through 12/31 Covers hospitals in bankruptcy Covers local news media	Applications and covered period extended through 12/31 $2 mil. cap for any new PPP loans Farmers may use ’19 gross income
Loan forgiveness	May calculate based on a 24-week period, through 12/31 Safe harbor for borrowers who cannot rehire	May calculate based on any period from origination to 12/31 Costs of operations, damages, suppliers, PPE also forgivable; group insurance counts as payroll Simplified documentation and certification for loans under $150k Simplified documentation for loans between $150k and $2 mil.
PPP Second Draw Loans	No provision	Eligible if (a) meet SBA size standard, (b) 300 or fewer employees, and (c) at least 50% revenue decline for Q1 or Q2 Certain non-profits, self-employed, independent contractors, agriculture co-ops eligible $2 mil. cap
Recovery Sector Loans	No provision	Available to “seasonal” employers (make 2/3rds of receipts during a 6 month period) and employers in low income census tracts Eligible if (a) meet SBA size standard, (b) 500 or fewer employees, and (c) at least 50% revenue decline for Q1 or Q2 Loan of 2x annual revenue, up to $10 mil., 20 years, 1% interest All PPP lenders eligible
Funding	Of remaining PPP funds: 25% to employers with 10 or fewer employees 25% to non-profits (half to under 500 employees) $10 Bil. for community financial institutions Additional $10 Bil. for EIDL grants	$90 Bil. additional funding plus $100 Bil. remaining funding for PPP or PPP second draw loans; of this new $190 Bil. pool, $25 Bil. to 2^nd draw for employers with 10 or fewer employees, $10 Bil. to 2^nd draw for community lenders $57.7 Bil. for recovery sector loans $10 Bil. for SBICs
Lender liability	Allows lenders to rely on attestation required under CARES Act relating to amounts refinanced, including interest on other debts and refinancing of other SBA loans, in order to be held harmless from enforcement action relating to forgiveness	Allows lenders *to rely on any* certification or documentation** submitted by an applicant in order to be held harmless from enforcement actions relating to origination or forgiveness
Non-profits	Eligibility extended to all non-profits of all sizes	Eligibility extended to certain types of 501(c)(6) entities with 50 or fewer employees and loan of up to $500k; Chambers of Commerce with 300 or fewer employees, DMOs with 300 or fewer employees
Tax issues	Principal, interest assistance not taxable Can be eligible for employee retention tax credit on non-forgiven portion of loan