Reviving the Economy Sustainably Towards A Recovery in Twenty-twenty Act or the RESTART Act
This bill extends the Paycheck Protection Program, established to support small businesses in response to COVID-19 (i.e., coronavirus disease 2019), for certain businesses, and it establishes a loan program whereby the Small Business Administration (SBA) shall guarantee loan amounts to certain businesses affected by COVID-19.
Specifically, the bill provides a paycheck protection loan recipient with 16 weeks to use such funds if the recipient has (1) less than 500 full-time employees, and (2) suffered a decline in revenues of at least 25%.
The bill also establishes a loan program whereby the SBA shall guarantee 100% of program loan amounts made to certain small businesses that have not more than 5,000 full-time employees. The terms for such loans shall include (1) a maximum duration of not more than seven years; (2) an amount that is not greater than 45% of 2019 gross receipts, up to $12 million; and (3) no payment on principal for the first two years of the loan.
A lender that is otherwise approved to make paycheck protection loans may make and approve loans established by the bill, and a recipient may use loan funds for specified allowable expenses including payroll costs, rent, utilities, and personal protective equipment.
Such loans may be forgiven up to the amount of total losses incurred by the recipient in the taxable year 2020.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 3814 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
2d Session
S. 3814
To establish a loan program for businesses affected by COVID-19 and to
extend the loan forgiveness period for paycheck protection program
loans made to the hardest hit businesses, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 21, 2020
Mr. Bennet (for himself and Mr. Young) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To establish a loan program for businesses affected by COVID-19 and to
extend the loan forgiveness period for paycheck protection program
loans made to the hardest hit businesses, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Reviving the Economy Sustainably
Towards A Recovery in Twenty-twenty Act'' or the ``RESTART Act''.
SEC. 2. EXTENSION OF COVERED PERIOD FOR LOAN FORGIVENESS UNDER THE
PAYCHECK PROTECTION PROGRAM FOR THE HARDEST HIT
BUSINESSES.
Section 1106 of the CARES Act (Public Law 116-136) is amended--
(1) by amending subsection (a)(3) to read as follows:
``(3) the term `covered period' means--
``(A) except as provided in subparagraph (B), the
8-week period beginning on the date of the origination
of a covered loan; or
``(B) the period beginning on the date of the
origination of a covered loan and ending on the later
of the date that is 16 weeks after the date of the
origination of the covered loan and the date that is 8
weeks after the date of enactment of the Reviving the
Economy Sustainably Towards A Recovery in Twenty-twenty
Act, if the eligible recipient of the covered loan--
``(i) has less than 500 full-time
equivalent employees; and
``(ii) makes a good faith certification to
the Administrator that, during the 8-week
period described in subparagraph (A), the
eligible recipient suffered a decline in gross
receipts of not less than 25 percent relative
to a comparable 8-week period--
``(I) immediately preceding March
2, 2020; or
``(II) during 2019;''; and
(2) in subsection (d)(2), by adding at the end the
following:
``(C) Exception.--This paragraph shall not apply
with respect to an eligible recipient described in
subsection (a)(3)(B).''.
SEC. 3. RESTART LOAN PROGRAM.
(a) Definitions.--In this section:
(1) Administration; administrator.--The terms
``Administration'' and ``Administrator'' mean the Small
Business Administration and the Administrator thereof,
respectively.
(2) Community development financial institution.--The term
``community development financial institution'' has the meaning
given the term in section 103 of the Riegle Community
Development and Regulatory Improvement Act of 1994 (12 U.S.C.
4702).
(3) Covered loan.--The term ``covered loan'' means a loan
made under this section during the covered period.
(4) Covered period.--The term ``covered period'' means--
(A) except as provided in subparagraph (B), and as
determined by the eligible recipient of a covered loan,
the 6-month period beginning on--
(i) the date of the origination of the
covered loan;
(ii) the first day of the next scheduled
pay period following the date of the
origination of the covered loan;
(iii) the first day of the first full month
following the date of the origination of the
covered loan; or
(iv) April 15, 2020; or
(B) with respect to an eligible recipient of a
covered loan that suffered a decline in gross receipts
of more than 80 percent in 2020 as compared to 2019 or
in the 6-month period beginning on the date of the
origination of the covered loan as compared to a
comparable period in 2019, and as determined by the
eligible recipient of a covered loan, the 12-month
period beginning on--
(i) the date of the origination of the
covered loan;
(ii) the first day of the next scheduled
pay period following the date of the
origination of the covered loan;
(iii) the first day of the first full month
following the date of the origination of the
covered loan; or
(iv) April 15, 2020.
(5) Eligible recipient.--The term ``eligible recipient''--
(A) means an individual or entity that--
(i) is eligible to receive a loan made
under section 7(a)(36) of the Small Business
Act (15 U.S.C. 636(a)(36)); or
(ii) has not more than 5,000 full-time
employees;
(B) includes--
(i) a nonprofit organization that--
(I) has not more than 5,000 full-
time employees; and
(II) is not more than 50 percent
owned or controlled by a State, local,
or Tribal government;
(ii) a business concern that--
(I) deals in rare coins and stamps;
and
(II) has not more than 5,000 full-
time employees; and
(iii) a business concern that leases or
finances equipment to other businesses, if the
business concern--
(I) has not more than 5,000 full-
time employees; and
(II) is not--
(aa) a mortgage lender; or
(bb) a lender participating
in the loan program under
section 7(a)(36) of the Small
Business Act (15 U.S.C.
636(a)(36)).
(6) Minority depository institution.--The term ``minority
depository institution'' has the meaning given the term in
section 308 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 1463 note).
(7) Nonprofit organization.--The term ``nonprofit
organization'' means an entity described in paragraph (3), (5),
(6), (7) (related to housing), (12), (13), or (19) of section
501(c) of the Internal Revenue Code and that is exempt from
taxation under section 501(a) of such Code.
(8) Payroll costs.--The term ``payroll costs'' has the
meaning given the term in section 7(a)(36)(A) of the Small
Business Act (15 U.S.C. 636(a)(36)(A)), except that such costs
shall not include--
(A) qualified wages taken into account in
determining the credit allowed under section 2301(g) of
the CARES Act (Public Law 116-136); or
(B) any payments made to an independent contractor.
(9) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(10) Underserved borrower.--The term ``underserved
borrower'' means any business concern that has traditionally
had difficulty accessing finance, including--
(A) business concerns that--
(i) have fewer than 25 employees and do not
have a strong relationship with a bank;
(ii) are owned or controlled by minorities;
(iii) are owned or controlled by women;
(iv) are owned or controlled by veterans,
including service-disabled veterans (as those
terms are defined in section 3(q) of the Small
Business Act (15 U.S.C. 632(q))); or
(v) are located in low-income and rural
communities, including those in areas eligible
for assistance under section 45D of the
Internal Revenue Code of 1986; and
(B) Tribal business concerns.
(b) Establishment.--The Administrator shall establish a program to
guarantee loans made to eligible recipients affected by COVID-19.
(c) Participation.--In an agreement to participate in a covered
loan on a deferred basis, the participation by the Administration shall
be 100 percent.
(d) Terms and Requirements.--
(1) Duration.--Except as provided in paragraph (4), the
duration of a covered loan shall be for not more than 7 years.
(2) Amount.--
(A) In general.--The amount of a covered loan made
to an eligible recipient shall be not more than the
lesser of--
(i) 45 percent of the 2019 gross receipts
of the eligible recipient; and
(ii) $12,000,000.
(B) Duplication of assistance.--
(i) In general.--An eligible recipient of a
covered loan shall not use proceeds of the
covered loan for the same expenses that are
covered using funds received under subsection
(a)(36) or (b)(2) of section 7 of the Small
Business Act (15 U.S.C. 636) or section 1110 of
the CARES Act (Public Law 116-136).
(ii) Reduction based on other sba loans.--
The amount of a covered loan for which an
eligible recipient may receive under this
section shall be reduced by the amount of any
assistance received by the eligible recipient
under subsection (a)(36) or (b)(2) of section 7
of the Small Business Act (15 U.S.C. 636) or
section 1110 of the CARES Act (Public Law 116-
136) that is intended to be used for the
allowable expenses described in subsection
(g)(2) during the covered period.
(3) Interest rate.--
(A) In general.--Except as provided in paragraph
(4), the interest rate on a covered loan shall be, as
determined by the Administrator and the Secretary--
(i) for the first 2 years of the covered
loan, not less than 2 percent and not more than
4 percent; and
(ii) for the third through seventh years of
the covered loan, the Applicable Federal Rate
plus 250 to 600 basis points based on the
decline in gross receipts of the eligible
recipient.
(B) No payments for 12 months.--No payments shall
be due on interest on a covered loan for the first 12
months of the covered loan.
(4) Special provisions for nonprofit organizations.--At the
time of application for a covered loan, a nonprofit
organization described in subsection (a)(5)(B) shall make an
election--
(A) for a covered loan with a maturity of not more
than 10 years and an interest rate of not more than 2
percent for the first 4 years of a covered loan, with
no eligibility for forgiveness of the covered loan
under subsection (j); or
(B) for a covered loan with the maturity and
interest rate terms described in paragraphs (1) and
(3), respectively, with the ability to obtain
forgiveness of the covered loan if the nonprofit
organization qualifies under subsection (j)(2).
(5) Payment deferral.--
(A) In general.--No payment of principal shall be
due on a covered loan for the first 2 years of the
covered loan.
(B) Additional deferral.--After the 2-year deferral
period described in subparagraph (A), the Administrator
may grant not more than an additional 2 years of
principal deferral to an eligible recipient of a
covered loan if the eligible recipient is certified by
the Administrator and the Secretary as economically
distressed based on publicly available criteria
established by the Administrator and the Secretary.
(6) Origination fees.--
(A) In general.--The origination fee for a covered
loan shall be as follows:
(i) 3.75 percent for a covered loan of not
more than $100,000.
(ii) 3.5 percent for a covered loan of more
than $100,000 and not more than $250,000.
(iii) 3.25 percent for a covered loan of
more than $250,000 and not more than $500,000.
(iv) 3 percent for a covered loan of more
than $500,000 and not more than $750,000.
(v) 2.75 percent for a covered loan of more
than $750,000 and not more than $1,000,000.
(vi) 2.5 percent for a covered loan of more
than $1,000,000 and not more than $1,500,000.
(vii) 2.25 percent for a covered loan of
more than $1,500,000 and not more than
$1,750,000.
(viii) 2 percent for a covered loan of more
than $1,750,000 and not more than $2,000,000.
(ix) 1.75 percent for a covered loan of
more than $2,000,000 and not more than
$2,500,000.
(x) 1.5 percent for a covered loan of more
than $2,500,000 and not more than $3,000,000.
(xi) 1.25 percent for a covered loan of
more than $3,000,000 and not more than
$3,500,000.
(xii) 1 percent for a covered loan of more
than $3,500,000 and not more than $4,000,000.
(xiii) 0.75 percent for a covered loan of
more than $4,000,000 and not more than
$12,000,000.
(B) Payment by federal government.--The
Administrator shall--
(i) for any covered loan that is made to an
eligible recipient with not more than 500 full-
time employees, pay the applicable origination
fee described in subparagraph (A); and
(ii) for any covered loan of not more than
$10,000,000 that is made to an eligible
recipient with more than 500 full-time
employees, pay 50 percent of the amount of the
applicable origination fee described in
subparagraph (A).
(C) Payment by eligible recipient.--After any
applicable payments by the Administrator under
subparagraph (B), the eligible recipient of a covered
loan--
(i) shall be responsible for paying the
remainder of any applicable origination fee
under subparagraph (A); and
(ii) may finance the amount of the
applicable origination fee as part of the
covered loan amount, with such origination fee
amount not counting toward the limitation on
covered loan amounts described in paragraph
(2)(A).
(7) Streamlined procedures.--The Administrator and the
Secretary shall establish streamlined application and loan
approval procedures for eligible recipients with not more than
500 full-time employees, including by allowing an eligible
recipient to use an existing application submitted to a lender
for the loan program under section 7(a)(36) of the Small
Business Act (15 U.S.C. 636(a)(36)) and update the application
as necessary for purposes of applying for a covered loan.
(8) Application.--
(A) Availability.--The Administrator shall make
available the application for a covered loan in the 10
most commonly spoken languages, other than English, in
the United States, which shall include Spanish,
Mandarin, Cantonese, Japanese, and Korean.
(B) Guidance.--Not later than 15 days after the
date of enactment of this Act, the Administrator and
the Secretary shall issue guidance to allow lenders to
receive applications for covered loans.
(C) Deadline for response.--A lender that receives
an application for a covered loan shall--
(i) not later than 2 days after submission
of the application to the Administrator, notify
the applicant that the lender submitted the
application and provide the confirmation
number; and
(ii) not later than 15 days after approving
the application, disburse the funds to the
applicant.
(D) Format.--The application for a covered loan
shall be similar to the application used for a loan
made under section 7(a)(36) of the Small Business Act
(15 U.S.C. 636(a)(36)), with additional details
requested by the Administrator as necessary.
(E) Application windows.--The Administrator shall
make efforts to ensure that underserved borrowers that
are eligible recipients receive covered loans,
including by establishing exclusive application windows
for those eligible recipients.
(9) Limitation on number of loans.--An eligible recipient
may receive not more than 2 covered loans, the requested
aggregate amount of which shall not exceed the limitation on
covered loan amounts described in paragraph (2)(A).
(10) Waiver of prepayment penalty.--Notwithstanding any
other provision of law, there shall be no prepayment penalty
for any payment made on a covered loan.
(11) United states operations.--A covered loan may only be
used for expenses related to the operations of an eligible
recipient carried out in the United States, including any
territory or possession of the United States and operations
carried out off of the United States coastline.
(e) Lenders.--
(1) Existing ppp lenders.--A lender that is approved to
make loans under section 7(a)(36) of the Small Business Act (15
U.S.C. 636(a)(36)) and is approved by the Administrator and the
Secretary may make and approve covered loans.
(2) Additional lenders.--The authority to make covered
loans shall be extended to additional lenders determined by the
Administrator and the Secretary to have the necessary
qualifications to process, close, disburse, and service loans
made with the guarantee of the Administration.
(3) Lenders serving underserved borrowers.--In approving
lenders to make covered loans, the Administrator and the
Secretary shall give priority to lenders that are community
development financial institutions with lower lending volumes,
minority depository institutions, mission-based nonprofit
lenders, nonbank lenders, and other financial institutions that
disproportionately serve underserved borrowers.
(4) Resale of loans.--A lender of a covered loan may sell
the covered loan to a third party.
(5) Sale of participation in covered loans.--A lender of a
covered loan may sell a participation in the covered loan to a
non-authorized lender in an amount that is not more than 85
percent of the covered loan.
(6) Agent disclosure.--In order to be eligible to obtain a
fee, any agent shall be disclosed to the lender and the
Administrator at the time of application for a covered loan.
(7) Capital and liquidity requirements.--Until December 31,
2021, the amount of a covered loan made by a lender shall be
disregarded by Federal regulators for the purpose of
calculating regulatory capital and liquidity requirements.
(f) Borrower Requirements.--
(1) Certification.--An eligible recipient applying for a
covered loan shall submit a good faith certification that the
eligible recipient suffered a decline in gross receipts of not
less than 25 percent--
(A) during an 8-week period during the period
beginning on February 15, 2020, and ending on July 31,
2020, relative to a comparable 8-week period during--
(i) the period beginning on January 1,
2020, and ending on March 31, 2020; or
(ii) 2019; or
(B) during a calendar or fiscal quarter during the
period beginning on February 15, 2020, and ending on
July 31, 2020, relative to the same calendar or fiscal
quarter in 2019.
(2) Accounting method.--An eligible recipient may calculate
the decline in gross receipts described in paragraph (1) using
the cash or accrual accounting method.
(3) Adjustments.--The Administrator, in consultation with
the Secretary, shall provide guidance on appropriate
adjustments to the terms under this subsection for eligible
recipients seeking a covered loan that are fiscal year
taxpayers or seasonal businesses.
(4) Restrictions.--
(A) In general.--The Administrator may enter into
agreements to guarantee covered loans made to eligible
recipients only if the Administrator determines that
the agreement provides that, until the date that is 12
months after the date on which the covered loan is no
longer outstanding--
(i) the eligible recipient or an affiliate
of the eligible recipient shall not purchase an
equity security that is listed on a national
securities exchange of the eligible recipient
or any parent company of the eligible
recipient, except to the extent required under
a contractual obligation in effect as of the
date of enactment of this Act;
(ii) the eligible recipient shall not pay
dividends or make other capital distributions
with respect to the common stock of the
eligible recipient; and
(iii) the restrictions on certain employee
compensation described in section 4004(a) of
the CARES Act (Public Law 116-136) apply to
officers and employees of the eligible
recipient.
(B) Exceptions.--
(i) Dividends.--Subparagraph (A)(ii) shall
not apply to any eligible recipient that is a
real estate investment trust (as defined under
section 856 of the Internal Revenue Code of
1986) for the taxable year in which the
distribution is made to the extent that such
entity distributes no more than 100 percent of
real estate investment trust taxable income (as
defined in section 857(b)(2) of such Code,
determined without regard to the deduction for
dividends paid (as defined in section 561 of
such Code)) during such taxable year.
(ii) Distributions.--Notwithstanding
subparagraph (A), during the period described
in that subparagraph an eligible recipient that
is an S-corporation or a limited liability
company may provide a distribution to pay
income taxes.
(5) Emergency relief funds.--
(A) In general.--Except as provided in subparagraph
(B), an eligible recipient applying for a covered loan
may not receive or have received any assistance under
4003 of the CARES Act (Public Law 116-136) for any
purpose.
(B) Return of funds.--An eligible recipient that
received assistance under section 4003 of the CARES Act
(Public Law 116-136) may apply for a covered loan if
the eligible recipient returns the funds received under
such section 4003.
(6) Business concerns with more than 1 physical location.--
A business concern that employs not more than 500 full-time
employees per physical location of the business concern and
that is assigned a North American Industry Classification
System code beginning with 72 at the time of disbursal shall be
eligible to receive a covered loan if the number of full-time
employees, in the aggregate, does not exceed 5,000.
(7) Waiver of affiliation rules.--The provisions applicable
to affiliations under section 121.103 of title 13, Code of
Federal Regulations, or any successor regulation, are waived
with respect to eligibility for a covered loan for--
(A) any eligible recipient with not more than 500
employees that is assigned a North American Industry
Classification System code beginning with 72;
(B) any eligible recipient operating as a
franchise;
(C) any eligible recipient that receives financial
assistance from a company licensed under section 301 of
the Small Business Investment Act of 1958 (15 U.S.C.
681); and
(D) any eligible recipient with not more than 500
full-time employees that is not more than 50 percent
owned or controlled by another entity.
(8) Calculation of full-time employees.--For purposes of
determining the number of full-time employees of an eligible
recipient as of February 15, 2020--
(A) any employee working not fewer than 30 hours
per week shall be considered a full-time employee; and
(B) any employee working not fewer than 10 hours
and fewer than 30 hours per week shall be counted as
one-half of a full-time employee.
(9) Credit elsewhere.--During the covered period, an
eligible recipient is not required to show that the eligible
recipient is unable to obtain credit elsewhere, as defined in
section 3(h) of the Small Business Act (15 U.S.C. 632(h)).
(10) Subordination.--Any covered loan made to an eligible
recipient shall be subordinate to any liability incurred by the
eligible recipient before February 15, 2020.
(11) Restrictions for prior bankruptcy.--A lender may deny
an application for a covered loan submitted by an eligible
recipient if, during the 7-year period preceding the date of
the application, the eligible recipient or a person that owns
or controls the eligible recipient filed a petition for
bankruptcy under chapter 7 or 13 of title 11, United States
Code.
(g) Use of Funds.--
(1) In general.--An eligible recipient of a covered loan
may use the proceeds for allowable expenses described in
paragraph (2).
(2) Allowable expenses.--The expenses described in this
paragraph are--
(A) payroll costs for employees and furloughed
employees, including--
(i) costs for continuation coverage
provided pursuant to part 6 of subtitle B of
title I of the Employee Retirement Income
Security Act of 1974 (other than under section
609), title XXII of the Public Health Service
Act, section 4980B of the Internal Revenue Code
of 1986 (other than subsection (f)(1) of such
section insofar as it relates to pediatric
vaccines), or section 8905a of title 5, United
States Code, or under a State program that
provides comparable continuation coverage,
other than coverage under a health flexible
spending arrangement under a cafeteria plan
within the meaning of section 125 of the
Internal Revenue Code of 1986; or
(ii) any other non-cash benefit;
(B) rent;
(C) utilities;
(D) mortgage interest payments on existing
mortgages as of February 15, 2020;
(E) scheduled interest payments on other scheduled
debt as of February 15, 2020;
(F) costs related to personal protective equipment;
(G) payments of principal on outstanding loans;
(H) payments made to independent contractors, as
reported on Form-1099 MISC;
(I) other ordinary and necessary business expenses,
including--
(i) settling existing debts owed to vendors
and replenishing inventory;
(ii) franchise fees;
(iii) hotel management fees;
(iv) maintenance expenses;
(v) administrative costs;
(vi) taxes;
(vii) operating leases; and
(viii) any other capital expenditure or
expense required under any State, local, or
Federal law or guideline related to social
distancing.
(3) Prohibited expenses.--An eligible recipient may not use
the proceeds of a covered loan--
(A) to purchase real estate;
(B) for payments of interest or principal on loans
originated after February 15, 2020;
(C) to invest or re-lend funds;
(D) for contributions or expenditures to, or on
behalf of, any political party, party committee, or
candidate for elective office; or
(E) for any other use as may be prohibited by the
Administrator.
(h) Loan Disbursal.--
(1) Initial disbursal.--During the initial 14-day period in
which lenders make and approve covered loans, the lenders shall
be limited to making covered loans to eligible recipients--
(A) with fewer than 50 full-time employees for the
first 7-day period; and
(B) with fewer than 500 full-time employees for the
second 7-day period.
(2) Report.--Not later than the later of the date that is
180 days after the date on which amounts made available to
carry out this Act are expended or July 31, 2021, the Inspector
General of the Administration shall submit to Congress a report
evaluating whether small business concerns (as defined in
section 3 of the Small Business Act (15 U.S.C. 632)), minority-
owned eligible recipients, and other underserved borrowers are
treated fairly in the process of making and approving covered
loans.
(i) Maturity for Loans With Remaining Balance After Application for
Forgiveness.--With respect to a covered loan that has a remaining
balance after a reduction based on the loan forgiveness amount under
subsection (j)--
(1) the remaining balance shall continue to be guaranteed
by the Administration under this section; and
(2) the covered loan shall have a maximum maturity of 78
months from the date on which the borrower applies for loan
forgiveness under that subsection.
(j) Loan Forgiveness.--
(1) In general.--Except as otherwise provided in this
subsection, an eligible recipient of a covered loan that is not
a nonprofit organization shall be eligible for forgiveness for
expenses described in subparagraphs (A) through (F) of
subsection (g)(2) incurred during the covered period using
proceeds of the covered loan in an amount equal to the product
obtained by multiplying--
(A) the product obtained by multiplying--
(i) the percentage decline in revenues of
the eligible recipient--
(I) if the covered period does not
extend past March 31, 2021, between the
total revenue received by the business
during calendar year 2020 and the total
revenue received by the business during
calendar year 2019; or
(II) between the total revenue
during the 6-month period following the
date of the origination of the covered
loan and the total revenue during a
comparable 6-month period during the
12-month period preceding the date of
the origination of the covered loan;
and
(ii) .90; and
(B)(i) for an eligible recipient with not more than
500 employees, the sum of the expenses of the eligible
recipient described in subparagraphs (A) through (F) of
subsection (g)(2) paid during the covered period; or
(ii) for an eligible recipient with more than 500
and not more than 5,000 employees, the sum of--
(I) the benefits described in clauses (i)
and (ii) of subsection (g)(2)(A) of this
section and the payments described in subitems
(CC) through (GG) of section
7(a)(36)(A)(viii)(I)(aa) of the Small Business
Act (15 U.S.C. 636(a)(36)(A)(viii)(I)(aa)) that
were paid during the covered period; and
(II) the expenses described in
subparagraphs (B) through (F) of subsection
(g)(2) that were paid during the covered
period.
(2) Loan forgiveness for small nonprofits.--A nonprofit
organization described in subsection (a)(5)(B) with not more
than 500 full-time employees that is an eligible recipient of a
covered loan shall be eligible for forgiveness for expenses
described in subparagraphs (A) through (F) of subsection (g)(2)
using, at the election of the nonprofit organization--
(A) the amount obtained using the formula described
in paragraph (1), except that gross receipts shall not
include donations, grants, dues, and investment income;
or
(B) the amount obtained using the formula described
in paragraph (1), except that the number in
subparagraph (A)(ii) of such paragraph shall be--
(i) .7 for a nonprofit organization with
not more than 50 full-time employees; and
(ii) .2 for a nonprofit organization with
not fewer than 50 and not more than 500 full-
time employees.
(3) Prohibition on forgiveness.--Any covered loan made to
an eligible recipient that is publicly traded, is a nonprofit
organization described in section 501(c)(7) of the Internal
Revenue Code, or is an eligible recipient described in
subsection (f)(7)(D) shall not be eligible for loan forgiveness
under this subsection.
(4) Limitation on amount of forgiveness.--
(A) In general.--The amount of all covered loans
made to an eligible recipient that may be forgiven
under this subsection shall not exceed the total losses
incurred by the eligible recipient in the taxable year
2020.
(B) Application of related party payments.--The
Secretary shall issue regulations that provide that,
for purposes of the loss calculation under subparagraph
(A)--
(i) with respect to an eligible recipient
of a covered loan with not fewer than 500 full-
time employees, related party transactions are
prohibited from counting toward the loss
calculation; and
(ii) with respect to an eligible recipient
of a covered loan with not more than 500 full-
time employees, any related party payments made
during the covered period cannot be greater
than related party payments made during taxable
year 2019.
(C) Capital losses.--For purposes of the loss
calculation under subparagraph (A), capital losses from
the sale of assets or deductions for guaranteed
payments to partners in partnerships or owners in S
corporations shall not count toward the loss
calculation.
(D) Limitation on ppe expenses.--An eligible
recipient may only receive forgiveness for personal
protective equipment expenses described in subsection
(g)(2)(F) of not more than $5,000.
(5) No limits based on percentage of funds used for certain
expenses.--The Administrator or the Secretary shall not place
limitations on forgiveness under this subsection based on the
percentage of covered loan proceeds that are used for specific
expenses described in subsection (g)(2).
(6) Hold harmless.--If a lender approved to make covered
loans has received the required documentation under this
section from an applicant attesting that the applicant has
accurately verified the eligibility, gross receipts, and
expenses of the applicant during the covered period--
(A) an enforcement action may not be taken against
the lender under section 47(e) of the Small Business
Act (15 U.S.C. 657t(e)) relating to loan forgiveness
for those expenses; and
(B) the lender shall not be subject to any
penalties by the Administrator relating to loan
forgiveness for the expenses.
(7) Treatment of forgiven amounts.--
(A) In general.--Section 108(a)(1) of the Internal
Revenue Code of 1986 is amended by striking ``or'' at
the end of subparagraph (D), by striking the period at
the end of subparagraph (E)(ii) and inserting ``, or'',
and by adding at the end the following new
subparagraph:
``(F) the indebtedness discharged is a covered loan
(as defined in section 4(a) of the RESTART Act)
discharged under section 4(j) of such Act.''.
(B) Reduction of tax attributes.--Section 108(b)(1)
of such Code is amended by striking ``or (C)'' and
inserting ``, (C), or (F) (after application of
subsection (j)(i))''.
(C) Limitation.--Section 108 of such Code is
amended by adding at the end the following new
subsection:
``(j) Special Rules for Discharges of Covered Loans.--
``(1) Inclusion of excess amounts.--
``(A) In general.--In the case of any taxpayer to
which subsection (a)(1)(F) applies, the gross income of
such taxpayer for any taxable year in the applicable
period shall be increased by the product of--
``(i) 20 percent, and
``(ii) so much of the amount excluded under
subsection (a)(1)(F) as exceeds $250,000.
``(B) Applicable period.--For purposes of
subparagraph (A), the term `applicable period' means
the 5 taxable-year period beginning with the taxable
year in which the discharge occurs.
``(2) Application to tax attributes.--For purposes of
applying subsection (b), the amount taken into account as
excluded from income under subsection (a)(1)(F) shall not
exceed $250,000.''.
(D) Effective date.--The amendments made by this
paragraph shall apply to discharges of indebtedness
after the date of the enactment of this Act.
(8) Coordination with employee retention tax credit.--
Section 2301(g) of the CARES Act (Public Law 116-136) is
amended to read as follows:
``(g) Election To Not Take Certain Wages Into Account.--
``(1) In general.--This section shall not apply to
qualified wages paid by an eligible employer with respect to
which such employer makes an election (at such time and in such
manner as the Secretary may prescribe) to have this section not
apply to such wages.
``(2) Coordination with restart loans.--The Secretary, in
consultation with the Administrator of the Small Business
Administration, shall issue guidance providing that payroll
costs paid or incurred during the covered period shall not fail
to be treated as qualified wages under this section by reason
of an election under paragraph (1) to the extent that a covered
loan of the eligible employer is not forgiven by reason of a
decision under section 3(j) of the RESTART Act. Terms used in
the preceding sentence which are also used in section 3 of such
Act shall have the same meaning as when used in such
section.''.
(k) Special Rules for Seasonal and New Businesses.--
(1) In general.--The Administrator and the Secretary shall
develop special rules and procedures for eligibility,
calculation of full-time employees, loan terms, and loan
forgiveness for--
(A) covered loans made to eligible recipients that
are seasonal that do not have sufficient revenue to
fully benefit from assistance provided under this
section; and
(B) covered loans made to eligible recipients
formed after January 1, 2019, that do not have
sufficient revenue to fully benefit from assistance
provided under this section.
(2) Loan amount.--The Administrator and the Secretary shall
develop terms with respect to the loan amount of a covered loan
for the eligible recipients described in paragraph (1) to
provide consistent support to those eligible recipients
relative to an existing or a non-seasonal eligible recipient.
(3) Prohibition.--An eligible recipient formed after
January 1, 2019, shall not be eligible for loan forgiveness
under this section.
(l) Transparency.--
(1) Reporting.--The Administrator shall collect and publish
information in searchable and downloadable format on eligible
recipients of covered loans, including--
(A) the name of each eligible recipient with not
fewer than 50 full-time employees that received a
covered loan, which shall be published on a monthly
basis;
(B) aggregate demographic information of applicants
that applied and applicants that were approved for a
covered loan, which shall be published on a weekly
basis;
(C) the number of loan applications received and
total loan amount requested, the number of loan
applications awaiting disposition and the total loan
amount awaiting disposition, the number of loan
applications rejected and the total loan amount
rejected, and the number of loan applications approved
and the total loan amount approved by each lender,
which shall be published on a weekly basis;
(D) aggregate total loan volume approved broken
down by industry and by State, which shall be published
on a weekly basis;
(E) details on the number of full-time equivalent
employees, loan size, loan terms, industry, and
headquarters location of each eligible recipient of a
covered loan, which shall be published on a monthly
basis; and
(F) the name of and loan amount forgiven for each
eligible recipient of a covered loan with not fewer
than 50 full-time employees, with aggregate loan amount
forgiveness data provided for all eligible recipients
of covered loans, which shall be published in a final
report not later than December 31, 2022.
(2) Multiple applications.--To the extent possible, the
Administrator should endeavor to de-duplicate multiple
applications for a covered loan submitted by the same applicant
to different lenders for purposes of public reporting.
(m) Separation of Funds and Bankruptcy Treatment.--
(1) Separation of funds.--An eligible recipient of a
covered loan shall--
(A) separately account for, and not commingle with
other funds, the proceeds of the covered loan; and
(B) account in detail for the use of the proceeds.
(2) Bankruptcy treatment.--
(A) In general.--If an eligible recipient of a
covered loan is a debtor in a case under chapter 7 or
13 of title 11, United States Code, and the covered
loan is still outstanding on the date of the
commencement of the case--
(i) any interest of the eligible recipient
in the proceeds of the covered loan shall not
be included in the property of the estate; and
(ii) the amount of the proceeds of the
covered loan that were not expended on
allowable expenses described in subsection
(g)(2) or forgiven under subjection (j) shall
be transferred to the Federal Government.
(B) Unrecovered amounts on covered loans.--Nothing
in subparagraph (A) shall preclude the Federal
Government from pursuing a claim in a case under
chapter 7 or 13 of title 11, United States Code, with
respect to the difference, if any, between the amount
due to the Federal Government on a covered loan and the
amount that was transferred under subparagraph (A)(ii).
(n) Authorization of Appropriations.--There is authorized to be
appropriated to the Administration--
(1) such sums as may be necessary to carry out this
section, to remain available until December 31, 2020; and
(2) $150,000,000, to remain available until expended, for
administrative purposes to update technologies to allow for
digital case management, electronic submissions, and increased
telecommunications related to the program under this section.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
Committee on Small Business and Entrepreneurship. Hearings held. Hearings printed: S.Hrg. 116-604.
Committee on Small Business and Entrepreneurship. Hearings held. Hearings printed: S.Hrg. 116-519.
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