Paycheck Protection Program Small Business Enhancement Act

I 116TH CONGRESS 2D SESSION H. R. 7894 To require the Administrator of the Small Business Administration to estab- lish a program to provide certain borrowers with a second loan under the paycheck protection program, to modify the eligibility and forgiveness requirement of the program, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 31, 2020 Mr. CURTIS (for himself, Mr. ROY, Mr. VAN DREW, Mr. MEUSER, and Ms. WILD) introduced the following bill; which was referred to the Committee on Small Business, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdic- tion of the committee concerned A BILL To require the Administrator of the Small Business Adminis- tration to establish a program to provide certain bor- rowers with a second loan under the paycheck protection program, to modify the eligibility and forgiveness require- ment of the program, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Paycheck Protection 4 Program Small Business Enhancement Act’’. 5 VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 7894 IH SEC. 2. EXTENDING AUTHORITY FOR COMMITMENTS FOR 1 THE PAYCHECK PROTECTION PROGRAM. 2 Section 1102(b)(1) of title I of division A of the 3 Coronavirus Aid, Relief, and Economic Security Act (Pub- 4 lic Law 116–136) is amended by striking ‘‘August 8, 5 2020’’ and inserting ‘‘December 31, 2020’’. 6 SEC. 3. ELIGIBILITY OF FRANCHISES AND 501(c)(6) ORGANI- 7 ZATIONS FOR THE PAYCHECK PROTECTION 8 PROGRAM. 9 Section 7(a)(36)(D) of the Small Business Act (15 10 U.S.C. 636(a)(36)(D)) is amended— 11 (1) in subparagraph (A)(vii), by striking ‘‘sec- 12 tion 501(c)(3)’’ and inserting ‘‘paragraph (6) or (3) 13 of section 501(c)’’; and 14 (2) in subparagraph (D)— 15 (A) in clause (iv)— 16 (i) in subclause (II), by striking 17 ‘‘and’’ at the end; 18 (ii) in subclause (III), by striking the 19 period at the end and inserting ‘‘; and’’; 20 and 21 (iii) by adding at the end the fol- 22 lowing new subclause: 23 ‘‘(IV) any business concern that 24 is a franchisor or franchisee as de- 25 scribed in clause (vii)(II).’’; and 26 VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 7894 IH (B) by adding at the end the following new 1 clause: 2 ‘‘(vii) FRANCHISES AND 501(c)(6) OR- 3 GANIZATIONS.—During the covered period, 4 the following shall be eligible to receive a 5 covered loan: 6 ‘‘(I) Any organization that is de- 7 scribed in section 501(c)(6) of the In- 8 ternal Revenue Code and that is ex- 9 empt from taxation under section 10 501(a) of such Code. 11 ‘‘(II) Any business concern that 12 is a franchisor or franchisee in a fran- 13 chise (as defined in section 436.1(h) 14 of title 16, Code of Federal Regula- 15 tions), regardless of whether the fran- 16 chise is assigned a franchise identifier 17 code by the Administration, if the 18 business concern employs not more 19 than 500 employees per physical loca- 20 tion of the business concern.’’. 21 VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 7894 IH SEC. 4. PROHIBITION ON USE OF LOAN PROCEEDS FOR 1 LOBBYING ACTIVITIES. 2 Section 7(a)(36)(F) of the Small Business Act (15 3 U.S.C. 636(a)(36)(F)) is amended by adding at the end 4 the following: 5 ‘‘(vi) PROHIBITION.—None of the pro- 6 ceeds of a covered loan may be used for 7 lobbying activities, as defined in section 3 8 of the Lobbying Disclosure Act of 1995 (2 9 U.S.C. 1602).’’. 10 SEC. 5. SUBSEQUENT LOANS UNDER THE PAYCHECK PRO- 11 TECTION PROGRAM. 12 (a) IN GENERAL.—An eligible business that received 13 a covered loan under section 7(a)(36) of the Small Busi- 14 ness Act may submit an application to the Administrator 15 of the Small Business Administration for a subsequent 16 loan made under the same terms, conditions, and proc- 17 esses as such covered loan. 18 (b) FORGIVENESS.— 19 (1) IN GENERAL.—A subsequent loan made 20 under subsection (a) shall be eligible for forgiveness 21 under section 1106 of the CARES Act under the 22 same terms, conditions, and processes as a covered 23 loan made under section 7(a)(36) of the Small Busi- 24 ness Act. 25 VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 7894 IH (2) ADDITIONAL FORGIVABLE EXPENSES.— 1 Amounts of a subsequent loan used for covered 2 worker protection expenditures shall be eligible for 3 forgiveness under such section 1106. 4 (3) COVERED PERIOD.—With respect to a sub- 5 sequent loan, the covered period (as defined in sec- 6 tion 1106(a)(3) of the CARES Act) shall begin on 7 the date of disbursement of the subsequent loan. 8 (c) SAFE HARBOR.— 9 (1) IN GENERAL.—A lender may rely on any 10 certification or documentation submitted by an ap- 11 plicant for a covered loan or an eligible recipient of 12 a covered loan that— 13 (A) is submitted pursuant to any statutory 14 requirement relating to covered loans or any 15 rule or guidance issued to carry out any action 16 relating to covered loans; and 17 (B) attests that the applicant or eligible 18 recipient, as applicable, has accurately verified 19 any certification or documentation provided to 20 the lender. 21 (2) NO ENFORCEMENT ACTION.—With respect 22 to a lender that relies on a certification or docu- 23 mentation described in paragraph (1)— 24 VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 7894 IH (A) an enforcement action may not be 1 taken against the lender acting in good faith re- 2 lating to origination or forgiveness of a covered 3 loan based on such reliance; and 4 (B) the lender acting in good faith shall 5 not be subject to any penalties relating to origi- 6 nation or forgiveness of a covered loan based on 7 such reliance. 8 (d) DEFINITIONS.—In this section: 9 (1) COVERED WORKER PROTECTION EXPENDI- 10 TURE.—The term ‘‘covered worker protection ex- 11 penditure’’— 12 (A) means an operating or a capital ex- 13 penditure, as determined in accordance with 14 generally accepted accounting principles, that is 15 required to facilitate the adaptation of the busi- 16 ness activities of an eligible recipient to comply 17 with requirements established or guidance 18 issued by the Department of Health and 19 Human Services, the Centers for Disease Con- 20 trol, or the Occupational Safety and Health Ad- 21 ministration during the period beginning on 22 March 1, 2020, and ending December 31, 2020, 23 related to the maintenance of standards for 24 sanitation, social distancing, or any other work- 25 VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 7894 IH er or customer safety requirement related to 1 COVID–19; 2 (B) may include— 3 (i) the purchase, maintenance, or ren- 4 ovation of assets that create or expand— 5 (I) a drive-through window facil- 6 ity; 7 (II) an indoor, outdoor, or com- 8 bined air or air pressure ventilation or 9 filtration system; 10 (III) a physical barrier such as a 11 sneeze guard; 12 (IV) an indoor, outdoor, or com- 13 bined commercial real property; 14 (V) an onsite or offsite health 15 screening capability; or 16 (VI) other assets relating to the 17 compliance with the requirements or 18 guidance described in subparagraph 19 (A), as determined by the Adminis- 20 trator in consultation with the Sec- 21 retary of Health and Human Services 22 and the Secretary of Labor; 23 VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 7894 IH (ii) expenses related to testing em- 1 ployees of an eligible business for COVID– 2 19; and 3 (iii) the purchase of— 4 (I) covered materials described in 5 section 328.103(a) of title 44, Code of 6 Federal Regulations, or any successor 7 regulation; 8 (II) particulate filtering facepiece 9 respirators approved by the National 10 Institute for Occupational Safety and 11 Health, including those approved only 12 for emergency use authorization; or 13 (III) other kinds of personal pro- 14 tective equipment, as determined by 15 the Administrator in consultation with 16 the Secretary of Health and Human 17 Services and the Secretary of Labor; 18 and 19 (C) does not include residential real prop- 20 erty or intangible property. 21 (2) ELIGIBLE BUSINESS.—The term ‘‘eligible 22 business’’ means an eligible recipient as defined in 23 section 7(a)(36)(A) of the Small Business Act (15 24 VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 7894 IH U.S.C. 636(a)(36)(A)), but does not include a non- 1 profit organization as defined in such section— 2 (A) that experienced a reduction in gross 3 receipts of more than 20 percent during— 4 (i) the period between April 1, 2020, 5 and June 1, 2020, as compared to the pe- 6 riod between April 1, 2019, and June 1, 7 2019; or 8 (ii) the period between July 1, 2020, 9 and September 1, 2020, compared to the 10 period between July 1, 2019, and Sep- 11 tember 1, 2019; and 12 (B) that is able to document an inability to 13 return to the same level of business activity as 14 such business was operating at before February 15 15, 2020, due to compliance with requirements 16 established or guidance issued by the Secretary 17 of Health and Human Services, the Director of 18 the Centers for Disease Control and Prevention, 19 or the Occupational Safety and Health Admin- 20 istration during the period beginning on March 21 1, 2020, and ending December 31, 2020, re- 22 lated to the maintenance of standards for sani- 23 tation, social distancing, or any other worker or 24 VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 7894 IH customer safety requirement related to COVID– 1 19. 2 SEC. 6. CLARIFICATION OF TREATMENT OF BUSINESS EX- 3 PENSES. 4 (a) IN GENERAL.—Subsection (i) of section 1106 of 5 the CARES Act (Public Law 116–136) is amended— 6 (1) by striking ‘‘1986, any amount’’ and insert- 7 ing ‘‘1986— 8 ‘‘(1) any amount’’; 9 (2) by striking the period at the end and insert- 10 ing ‘‘, and’’; and 11 (3) by adding at the end the following new 12 paragraph: 13 ‘‘(2) no deduction shall be denied or reduced, 14 no tax attribute shall be reduced, and no basis in- 15 crease shall be denied, by reason of the exclusion 16 from gross income provided by paragraph (1).’’. 17 (b) EFFECTIVE DATE.—The amendments made by 18 this section shall apply as if included in the enactment 19 of section 1106 of the CARES Act (Public Law 116–136). 20 SEC. 7. FORGIVENESS FOR COVERED LOANS UNDER 21 $150,000. 22 Section 1110 of the CARES Act (15 U.S.C. 9009) 23 is amended by adding at the end the following new sub- 24 sections: 25 VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 7894 IH ‘‘(m) FORGIVENESS FOR COVERED LOANS UNDER 1 $150,000.— 2 ‘‘(1) IN GENERAL.—Notwithstanding subsection 3 (e), with respect to a covered loan made to an eligi- 4 ble recipient that is not more than $150,000, the 5 covered loan amount shall be forgiven under this 6 section if the eligible recipient submits to the lender 7 a one-page online or paper form, to be established 8 by the Administrator not later than 7 days after the 9 date of enactment of this subsection, that attests 10 that the eligible recipient complied with the require- 11 ments under section 7(a)(36) of the Small Business 12 Act (15 U.S.C. 636(a)(36)). 13 ‘‘(2) HOLD HARMLESS.—With respect to a 14 lender that relies on an attestation submitted by an 15 eligible recipient under paragraph (1), no enforce- 16 ment action may be taken against the lender for any 17 falsehoods contained in the attestation. 18 ‘‘(3) DEMOGRAPHIC INFORMATION.—The online 19 or paper form established by the Administrator 20 under paragraph (1) shall include a means by which 21 an eligible recipient may, at the discretion of the eli- 22 gible recipient, submit demographic information of 23 the owner of the eligible recipient, including the sex, 24 race, ethnicity, and veteran status of the owner. 25 VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 7894 IH ‘‘(n) ENFORCEMENT ACTION AGAINST BOR- 1 ROWERS.—An eligible recipient of a covered loan may only 2 be subject to an enforcement action or penalty relating 3 to loan origination, forgiveness, or guarantee of the cov- 4 ered loan if the eligible recipient commits fraud or expends 5 covered loan proceeds on expenses that are not allowable 6 under section 7(a)(36)(F) of the Small Business Act (15 7 U.S.C. 636(a)(36)(F)).’’. 8 Æ VerDate Sep 11 2014 02:52 Aug 22, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6301 E:\BILLS\H7894.IH H7894 kjohnson on DSK79L0C42PROD with BILLS