U.S. Treasury Secretary Steven Mnuchin is admitting that he is considering changes to the restrictions on small business loans under the Treasury’s and Small Business Administration’s Paycheck Protection Program (PPP).
During an interview with CNBC on Monday, Mnuchin confirmed he is now open to the possibility of changes to loan terms amid growing concerns from small business owners and lawmakers, collectively.
The current terms offer full loan forgiveness to businesses that use 75% of loan proceeds to cover eight weeks of paycheck payments to employees while committing to keeping workers on the payroll.
Since only the remaining 25% can be used for overhead expenses, many small business owners have expressed concerns about the lack of flexibility they have in using the funds.
Mnuchin reiterated that the restrictions are based on what Congress designed. However, he would be open to supporting changes if Congress sees fit to do so.
“The way Congress designed this was eight weeks of payroll and 25 percent of overhead. If Congress wants to change that rule. I’m happy to work with Congress if there’s bipartisan support to do that,” Mnuchin said.
He continued, “But the 75% test was just a clarity on a test that was clear in the way Congress designed this program. But again, like anything else, if we need to make technical fixes as we see different issues, I think one of the things we’re particularly sympathetic to is the restaurants.”
See Mnuchin’s full interview below:
Mnuchin went on to acknowledge the problem restaurant owners are facing and noted that the Treasury would look at a “technical fix” for the problem.
“Many of the restaurants are just beginning to open up and have said that you know, they’d really like to hold the money. They can’t do that. That’s not something we can do, but we’ll look at a technical fix,” Mnuchn said.
Mnuchin’s latest remarks follow his previous response to business owners’ frustration about the strict loan guidelines.
During that interview, Mnuchin sternly insisted he could offer no flexibility where the guidelines were concerned due to the program being designed by Congress, as previously reported on IJR.
“This is the way the program was designed by Congress. We think it has the right intent to get the money to employees. So I don’t have the flexibility to change that,” Mnuchin said.
Mnuchin still projects that the PPP will likely help approximately 60 million Americans to get back to work.
