The Government is working toward adjusting its Paycheck Protection Program (PPP) rules to give applicant businesses more flexibility and more time to spend their loans.
The PPP is the US government’s main stimulus measure to combat the economic impact of the COVID-19 pandemic. It provides forgivable loans to businesses to cover their payroll and other expenses. In order to qualify for the loan, these applicant businesses must certify that the loan is necessary due to economic uncertainty. Last week, we reported that the SBA would not conduct audits on small businesses taking out discrete loans under $2 million.
Although the PPP was initially highly popular after first accepting applications, interest fell sharply after a few weeks, in part due to businesses finding the program’s rules too restrictive. The House is expected to vote this week on a reworking of the program that would give businesses 24 weeks to spend the loan, up from eight weeks. It would also eliminate the requirement that businesses spend more than a quarter of the money on non-payroll expenses, among other changes.
To date, the Government has approved in excess of $512 billion in loans under the PPP. Many businesses that have already secured the loan are worried that they will have to repay the money because they will be unable to spend the money before their 8-week deadline, which will come up in June for many. The issue is that they remain unable to rehire staff to meet the payroll spending requirements due to the pandemic.
Looking for funding outside of the PPP? Read this article detailing your alternative options.