Although the U.S. House of Representatives has passed the HEROES Act, the latest COVID-19 economic stimulus legislation, the U.S. Senate does not plan to consider the HEROES Act but is actively negotiating with the Administration and the House on what will be the fifth COVID-19 economic stimulus package. This fifth stimulus legislation will likely be the final economic stimulus legislation in 2020. The automotive repair sector participated in the both the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) programs housed at the U.S. Small Business Administration. 

It will be helpful for automotive repairers to review what is considered as the House democratic proposal, the HEROES Act, and those small business initiatives coming out of the republican led Senate Small Business Committee leadership.

The HEROES Act contained key small business provisions important for many automotive repair shops:

·      Extension of the covered period from June 30 to December 31;

·      Extends eligibility to all nonprofits of all sizes;

·       Clarifies that loan terms extend through the end of the covered period;

·      Establishes a minimum maturity on PPP loans of 5 years to enable borrowers to amortize loans over a longer period of time, which lowers monthly payments;

·      Clarifies that PPP loans cannot be calculated on a compound basis, saving borrowers money over the long-term;

·      Modifications to PPP Funds, including a carve out of 25% of the existing funds on the date of enactment to be used specifically for small businesses with 10 or fewer employees to guarantee they are fully able to access PPP assistance;

·      Adds flexibility in the covered period for borrowers by extending the 8-week period to 24 weeks and extends the covered period from June 30 to December 31;

·      Harmonizes the use of proceeds with forgiveness;

·      Mandates forgiveness data collection and reporting;

·      Creates a safe harbor for borrowers who cannot rehire in the prescribed timeframe;

·      Eliminates the 75/25 rule on use of loan proceeds;

·      Ensures the principal and interest loan assistance is not treated as taxable income to small business borrowers.

U.S. Senate Small Business Committee Chairman Marco Rubio (R-FL) has been very supportive of additional small business assistance provisions in any new economic stimulus legislation being considered in the Senate. Chairman Rubio and Senate Appropriations Committee member Susan Collins (R-ME) have proposed PPP amendments that should enhance the popular program. Provisions include:

Additional Eligible PPP Expenses:

·      Covered operations expenditures. Payment for any software, cloud computing, and other human resources and accounting needs.

·      Property damage costs. Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance.

·      Covered supplier costs. Expenditures to a supplier pursuant to a contract for goods in effect prior to February 15, 2020 that are essential to the recipient’s current operations.

·      Covered worker protection expenditure. Personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines related to COVID-19 during the period between March 1, 2020, and December 31, 2020.

·      Selection of Covered Period for Forgiveness. Allows the borrower to elect a covered period ending at the point of the borrower’s choosing between 8 weeks after origination and December 31, 2020.

·      Simplified Application.

·      Paycheck Protection Program Second Draw Loan.

·      501 (c) (6) Organizations Eligible.

Chairman Rubio’s proposed second PPP program will be popular with many automotive repair shops. As of this writing, Congress has returned home for the August Break. House, Senate and Administration officials continue to dialogue about what the fifth economic stimulus legislation will contain.

The Automotive Service Association (ASA) is encouraging members of Congress to move forward with the fifth stimulus legislation before heading home in October.  In addition, ASA supports establishing a second, revised PPP program for shops to participate.