Paycheck Protection Program Small Business Enhancement Act

To require the Administrator of the Small Business Administration to establish 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. 1. Short title This Act may be cited as the Paycheck Protection Program Small Business Enhancement Act 2. Extending authority for commitments for the paycheck protection program Section 1102(b)(1) of title I of division A of the Coronavirus Aid, Relief, and Economic Security Act ( Public Law 116–136 August 8, 2020 December 31, 2020 3. Eligibility of franchises and 501(c)(6) Section 7(a)(36)(D) of the Small Business Act ( 15 U.S.C. 636(a)(36)(D) (1) in subparagraph (A)(vii), by striking section 501(c)(3) paragraph (6) or (3) of section 501(c) (2) in subparagraph (D)— (A) in clause (iv)— (i) in subclause (II), by striking and (ii) in subclause (III), by striking the period at the end and inserting ; and (iii) by adding at the end the following new subclause: (IV) any business concern that is a franchisor or franchisee as described in clause (vii)(II). ; and (B) by adding at the end the following new clause: (vii) Franchises and 501(c)(6) During the covered period, the following shall be eligible to receive a covered loan: (I) Any organization that is described in section 501(c)(6) of the Internal Revenue Code and that is exempt from taxation under section 501(a) of such Code. (II) Any business concern that is a franchisor or franchisee in a franchise (as defined in section 436.1(h) of title 16, Code of Federal Regulations), regardless of whether the franchise is assigned a franchise identifier code by the Administration, if the business concern employs not more than 500 employees per physical location of the business concern. . 4. Prohibition on use of loan proceeds for lobbying activities Section 7(a)(36)(F) of the Small Business Act ( 15 U.S.C. 636(a)(36)(F) (vi) Prohibition None of the proceeds of a covered loan may be used for lobbying activities, as defined in section 3 of the Lobbying Disclosure Act of 1995 ( 2 U.S.C. 1602 . 5. Subsequent loans under the paycheck protection program (a) In general An eligible business that received a covered loan under section 7(a)(36) of the Small Business Act may submit an application to the Administrator of the Small Business Administration for a subsequent loan made under the same terms, conditions, and processes as such covered loan. (b) Forgiveness (1) In general A subsequent loan made under subsection (a) shall be eligible for forgiveness under section 1106 of the CARES Act under the same terms, conditions, and processes as a covered loan made under section 7(a)(36) of the Small Business Act. (2) Additional forgivable expenses Amounts of a subsequent loan used for covered worker protection expenditures shall be eligible for forgiveness under such section 1106. (3) Covered period With respect to a subsequent loan, the covered period (as defined in section 1106(a)(3) of the CARES Act) shall begin on the date of disbursement of the subsequent loan. (c) Safe harbor (1) In general A lender may rely on any certification or documentation submitted by an applicant for a covered loan or an eligible recipient of a covered loan that— (A) is submitted pursuant to any statutory requirement relating to covered loans or any rule or guidance issued to carry out any action relating to covered loans; and (B) attests that the applicant or eligible recipient, as applicable, has accurately verified any certification or documentation provided to the lender. (2) No enforcement action With respect to a lender that relies on a certification or documentation described in paragraph (1)— (A) an enforcement action may not be taken against the lender acting in good faith relating to origination or forgiveness of a covered loan based on such reliance; and (B) the lender acting in good faith shall not be subject to any penalties relating to origination or forgiveness of a covered loan based on such reliance. (d) Definitions In this section: (1) Covered worker protection expenditure The term covered worker protection expenditure (A) means an operating or a capital expenditure, as determined in accordance with generally accepted accounting principles, that is required to facilitate the adaptation of the business activities of an eligible recipient to comply with requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration during the period beginning on March 1, 2020, and ending December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19; (B) may include— (i) the purchase, maintenance, or renovation of assets that create or expand— (I) a drive-through window facility; (II) an indoor, outdoor, or combined air or air pressure ventilation or filtration system; (III) a physical barrier such as a sneeze guard; (IV) an indoor, outdoor, or combined commercial real property; (V) an onsite or offsite health screening capability; or (VI) other assets relating to the compliance with the requirements or guidance described in subparagraph (A), as determined by the Administrator in consultation with the Secretary of Health and Human Services and the Secretary of Labor; (ii) expenses related to testing employees of an eligible business for COVID–19; and (iii) the purchase of— (I) covered materials described in section 328.103(a) of title 44, Code of Federal Regulations, or any successor regulation; (II) particulate filtering facepiece respirators approved by the National Institute for Occupational Safety and Health, including those approved only for emergency use authorization; or (III) other kinds of personal protective equipment, as determined by the Administrator in consultation with the Secretary of Health and Human Services and the Secretary of Labor; and (C) does not include residential real property or intangible property. (2) Eligible business The term eligible business 15 U.S.C. 636(a)(36)(A) (A) that experienced a reduction in gross receipts of more than 20 percent during— (i) the period between April 1, 2020, and June 1, 2020, as compared to the period between April 1, 2019, and June 1, 2019; or (ii) the period between July 1, 2020, and September 1, 2020, compared to the period between July 1, 2019, and September 1, 2019; and (B) that is able to document an inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration during the period beginning on March 1, 2020, and ending December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19. 6. Clarification of treatment of business expenses (a) In general Subsection (i) of section 1106 of the CARES Act ( Public Law 116–136 (1) by striking 1986, any amount 1986— (1) any amount ; (2) by striking the period at the end and inserting , and (3) by adding at the end the following new paragraph: (2) no deduction shall be denied or reduced, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by paragraph (1). . (b) Effective date The amendments made by this section shall apply as if included in the enactment of section 1106 of the CARES Act ( Public Law 116–136 7. Forgiveness for covered loans under $150,000 Section 1110 of the CARES Act ( 15 U.S.C. 9009 (m) Forgiveness for covered loans under $150,000 (1) In general Notwithstanding subsection (e), with respect to a covered loan made to an eligible recipient that is not more than $150,000, the covered loan amount shall be forgiven under this section if the eligible recipient submits to the lender a one-page online or paper form, to be established by the Administrator not later than 7 days after the date of enactment of this subsection, that attests that the eligible recipient complied with the requirements under section 7(a)(36) of the Small Business Act ( 15 U.S.C. 636(a)(36) (2) Hold harmless With respect to a lender that relies on an attestation submitted by an eligible recipient under paragraph (1), no enforcement action may be taken against the lender for any falsehoods contained in the attestation. (3) Demographic information The online or paper form established by the Administrator under paragraph (1) shall include a means by which an eligible recipient may, at the discretion of the eligible recipient, submit demographic information of the owner of the eligible recipient, including the sex, race, ethnicity, and veteran status of the owner. (n) Enforcement action against borrowers An eligible recipient of a covered loan may only be subject to an enforcement action or penalty relating to loan origination, forgiveness, or guarantee of the covered loan if the eligible recipient commits fraud or expends covered loan proceeds on expenses that are not allowable under section 7(a)(36)(F) of the Small Business Act ( 15 U.S.C. 636(a)(36)(F) .

Summary: Paycheck Protection Program Small Business Enhancement Act This bill extends the duration of, authorizes subsequent loans under, and otherwise modifies the Paycheck Protection Program established to support small businesses in response to COVID-19 (i.e., coronavirus disease 2019). Specifically, the bill extends the Paycheck Protection Program through December 31, 2020. It also authorizes a recipient of a paycheck protection loan to apply for a subsequent loan made under the same terms, conditions, and process, and for which the recipient shall be eligible for forgiveness in the same manner, as an initial paycheck protection loan. Further, the bill expands program eligibility to include (1) organizations such as business leagues and chambers of commerce, and (2) franchisors or franchisees that employ not more than 500 employees per physical location. The bill also prohibits the use of program amounts for lobbying activities and makes eligible expenses tax deductible. In addition, the bill provides for an abbreviated process for forgiveness of a paycheck protection loan that is not more than $150,000.