The RESTART Act: The Small Business Relief Proposal — You Never Heard Of!
The RESTART Act is a proposal that extends and broadens the Paycheck Protection Program (PPP) and it’s likely you never heard of it! It’s been gaining momentum in Congress and could be part of the next stimulus package. Here’s what small business owners need to know.
Closer Look: The RESTART Act
This act was proposed back in May by both Senators Todd Young (R-Ind.) and Michael Bennet (D-Colo.) as an alternative to the PPP. They had claimed the PPP would not meet the needs of small and mid-sized businesses impacted most by the coronavirus pandemic.
The proposal aimed at creating a new, longer-term program of federally guaranteed low rate loan, (some forgivable) with terms of up to seven years for businesses with up to 5,000 employees.
Comparatively, The PPP, originally provided two-year loans for businesses with up to only 500 employees, with forgiveness on loans to those quickly re-hiring workers. PPP loans made after June 5th would last for five years.
While PPP loans are forgivable for all recipients if specific rules are met, RESTART loans wouldn’t be forgivable at all for most public companies.
The RESTART Act targets businesses that have been affected the most by the pandemic, thus any amount of loan forgiveness depends solely on the amount of revenue the business lost.
Not Just For Payroll
RESTART loan terms allow money to be used for a wider variety of expenses, that doesn’t just include payroll – but for other operating costs. These include Personal Protective Equipment (PPE) such as face masks and gloves. PPP loans were focused on keeping workers on the payroll in the short-term and were more restrictive.
“I believe that something like the RESTART Act will ultimately be included in our package, perhaps as soon as this week,” Sen. Young said in a Tuesday interview on MSNBC, citing “incredible progress” in moving the RESTART bill along.
Stimulus Package – Where Do Things Stand?
As expected, lawmakers are struggling to come to an agreement on the larger scale items in the next stimulus package. These include state and local aid and unemployment insurance. However, both sides agree on the need for more small business support. Currently, 47 Senators support the bill “as is” now. Both Republicans and Democrats are on board along with many CEOS. This includes than 100 C-suite leaders, such as former Starbucks CEO Howard Schultz, Facebook COO Sheryl Sandberg, and Microsoft CEO Satya Nadell. Each asked Congress to offer a comprehensive relief package for small businesses in the next bill. The also specifically cites the RESTART Act as the type of legislation they would support.