The U.S. House of Representatives passed a bill to extend a provision within the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that establishes streamlined bankruptcy procedures for small businesses.
The Small Business Reorganization Act in 2019 has already passed in the Senate, so now it moves to President Joe Biden’s desk to be signed into law.
The CARES Act temporarily allowed more small businesses to qualify for those streamlined procedures by increasing the upper debt limit from $2.7 million to $7.5 million. However, that increase expired on March 27, 2022.
This bill would provide a two-year extension to the CARES Act increase to $7.5 million. Further, it would increase the debt limit for individuals to qualify for Chapter 13 bankruptcy for two years, allowing more individuals the opportunity to try to save their homes from foreclosure. This is particularly important now with rising home prices and exploding student loan debt, which could push more people over the debt limit to qualify for Chapter 13 bankruptcy.
“This is a win for the small businesses and working families trying to regain their financial footing after a difficult few years,” U.S. Sen. Sheldon Whitehouse (D-RI) said. “We need to do everything we can to help Americans recover from the pandemic and the economic turmoil it triggered. That’s why I’m glad our bipartisan bill will soon be the law of the land.”
Whitehouse was one of several senators who praised the House for passing this bill that originated in the Senate. Whitehouse was the lead sponsor of the bill along with U.S. Sen. Chuck Grassley (R-IA).
“Small businesses that fall on hard times should not face a mountain of paperwork designed for major corporations in order to reorganize and continue operating. Senator Whitehouse and I passed the Small Business Reorganization Act in 2019 to streamline and eliminate barriers in the bankruptcy process for small businesses.? In a broadly bipartisan manner, Congress has acted to build on the success of this policy to help more small businesses stay afloat – especially in the face of challenging economic headwinds,” Grassley said.
U.S. Sens. Dick Durbin (D-IL) and John Cornyn (R-TX), who served as bill cosponsors, also applauded the passage of legislation.
“American families and small businesses facing economic hardship need Congress’s help,” Durbin said. “Our bipartisan legislation will provide small businesses and families with more flexibility to navigate the bankruptcy system and get back on their feet.”