Since the beginning of the Covid-19 crisis, small businesses around the country were forced to shut down. As the national economy finally reopens, several are struggling to remain afloat. The resurgence of the Paycheck Protection Program might change things.
The Payroll Protection Program emerged earlier this spring as part of Congress’ CARES Act—which devotes $650B to aid Americans in light of the national climate—and has been extended until August 8, 2020. PPP loans are subsidized by the U.S. Small Business Administration (SBA) and are meant to help small businesses cover costs like payroll, mortgages and utilities. PPP loan applicants can receive forgiveness depending on the business’ adherence to guidelines.
Some have doubted the credibility of the program and demanded transparency from both the SBA and the Department of the Treasury. The SBA’s July 6 press release shared the application information of over 650,000 successful borrowers. This was only a fraction of the over 4.4 million businesses which applied for PPP loans, a number comparable to the thousand loans given by the SBA annually.
The report included everything from businesses’ names and loan amounts, to their NAICS codes and the amount of jobs retained. Some borrowers have acknowledged mistakes in the reports—particularly concerning employee numbers—but these are likely the fault of fast paced lending and borrowing. These details imply that borrowing businesses will be held accountable by the press for how they use funds.
Regarding loan forgiveness, the Paycheck Protection Program Flexibility Act—approved on June 3—gives borrowers more time to apply.. Borrowers who are hoping for loan forgiveness still have to apply on or before the maturity date of the loan.
The August 8 extension allows potential borrows to apply for a part of the remaining $130B. For those who miss the deadline, Congress is working on the proposal of an additional COVID relief service.
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