Business was growing so strongly at the Montclair Social Club that the owner was constructing an event space in addition to the restaurant. The pandemic shut down those dreams. (August 3)
WASHINGTON – The Paycheck Protection Program, which helped keep more than 5 million small businesses afloat during the coronavirus pandemic, expires today with no clear consensus about its future.
Discussions on Capitol Hill about refashioning the PPP program have stalled amid a larger stalemate between congressional leaders and the White House over another round of stimulus relief. There is bipartisan sentiment to extend the program in a way that helps even smaller businesses survive but there is disagreement over exactly how to do that.
Without a broad stimulus deal, President Donald Trump Friday threatened to issue several executive orders aimed at helping the economy but none of them would extend the small business loan program.
Advocates for mom-and-pop businesses are angry about the inaction.
(Photo: Getty Images)
“PPP is about to expire, and Congress is not prepared to provide any additional help to small businesses on the brink of collapse,” said John Arensmeyer, founder and CEO of Small Business Majority, an advocacy group which claims a membership of 65,000 nationwide. “There are a number of small businesses in our network that cannot survive even one more month at the current rate of business without more help.”
A survey of its members by the organization found that 80% of small business owners would like to take a second PPP loan. Without a second loan or other stimulus relief, nearly half – 44% – of members said they would be unable to survive another six months.
More: Coronavirus: House passes PPP extension bill giving small businesses more time to apply for lifeline
The PPP fund has about $130 billion left from the roughly $650 billion Congress provided.
Many businesses have credited the program with keeping them alive when much of the economy closed down in the spring. But the need for such assistance has been alleviated somewhat by the decision by many state and local governments to ease social distancing restrictions.
Under the program, businesses with 500 or fewer workers are eligible for loans up to $10 million, which become forgivable if at least 60% of the amount is spent on payroll.
Senators are in discussions to revamp the program so that smaller businesses could apply for a second loan with Republicans saying those with up to 300 workers should be eligible and Democrats proposing a cap of 100 employees.
More: Mnuchin to ask Trump to issue executive orders after coronavirus stimulus talks fall apart
Many small restaurant owners say they were generally unavailable to take advantage of the PPP because most of their expenses are not payroll-related. They say a second round of PPP won’t do much to alleviate their hardship.
Instead, they’re pushing for passage of the Restaurants Act, bipartisan legislation that would create a $120 billion grant program for non-chain restaurants needing help with rent, payroll, utilities, food and supplies. The fund would be different from the PPP because it wouldn’t require more than half be spent on payroll and wouldn’t be a loan program.
Stimulus money for businesses (Photo: USA TODAY)
A survey released Thursday by the Independent Restaurant Coalition found that most say there’s a 1-in-3 chance their business won’t survive beyond October.
Created by the Coronavirus Aid, Relief and Economic Security (CARES) Act Congress passed in March, the PPP stumbled out of the gate due to technical issues posed by a massive volume of loan applications.
There were accusations that private banks in charge of processing the loans put favored clients at the head of the line as smaller businesses were forced to wait. Then the fund ran out of money and Congress had to to approve a second round.
Publicly traded companies, like Shake Shack, and professional sports teams like the NBA’s Los Angeles Lakers, also took advantage as did businesses associated with members of Congress.
A business owner opens the door at a cafe wearing a facemask to curb the spread of coronavirus. (Photo: Getty Images)
Profitable firms also had access to loans, a loophole that would not be permitted under the revamped program lawmakers are now discussing.
Despite the hiccups, PPP loans has been viewed largely as a success. As of July 31, about 5 million businesses received loans totaling more than $521 billion, according to the Small Business Administration which runs the program.
“The PPP was a lifeline for small businesses, helping them navigate through the worst of the health and economic crisis,” said Holly Wade, director of research for the National Federation of Independent Businesses. “Unfortunately, many small business owners are still struggling to survive. The remaining PPP funds would be a huge help for those who still need additional financial assistance to get through the crisis.”
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