The Paycheck Protection Program (PPP), a federally funded lending program created as part of the CARES Act as an incentive for small businesses to maintain their wages, stopped applying for loan applications last weekend.
Finance approved lenders have made more than five million loans worth more than $ 521 billion since the end of July, according to the Small Business Administration. with the Trump Administration touting that more than 51 million jobs were saved. This leaves as much as $ 128 billion left in PPP funds, not counting the loans that occurred in the last week of the program.
The PPP program has already received several lifelines. It first received an additional $ 310 billion in funding after its initial $ 349 billion in less than two weeks in April. The deadline for the application was then extended an additional five weeks beyond the original expiration date of June 30th.
At present, there is not much else to do to strengthen this sector of the economy. Much of the appeal of PPP loans was the potential for the loans to be forgiven if they were used for wage compensation and other eligible expenses. Although the program for economic disaster relief loans continues to apply, the low-cost loans still require any repayment. Plus, the EIDL Advance program, which was a subsidy program from the SBA, closed in July after it paid out its entire $ 20 billion allotment.
What can happen next with PPP loans
It seems likely that Congress will agree to include provisions to extend the PPP program if companies with cash-strapped in the country seek solvency.
Unemployment remains high, as about a quarter (23%) of Americans say they have been fired or fired from their jobs due to the COVID-19 pandemic, according to a July 2020 snap poll conducted by Capital Collection Management, a debt agency.
When Republicans introduced their version of a second incentive package, known as the HEALS Act, it enacted legislation that would offer a second forgiving loan to the heaviest hit companies that can provide at least a 50% reduction in gross income shown during the pandemic. There are four main components to the bill:
- Second sign PPP loans including $ 190 billion in financing
- PPP improvements focus on expanding the scope of loan eligibility expenditures
- Invest in small business financing companies up to $ 10 billion
- Allocate $ 100 billion in low-cost, low-cost loans to eligible “recovery sectors” of the economy, which are defined to include rural, low-income and eligible seasonal businesses
By enacting provisions aimed at helping businesses that do not have their financial footing back, Republicans say the money will go to those who need it most.
The $ 3 trillion HEROES proposal from Democrats did not outline plans for a second subscription or additional PPP funds, but did include provisions that would further reduce the rules for forgiving PPP loans. It would also divide the remaining funds to go to underfunded small business interests.
But in July, Senate Minority Leader Chuck Schumer (D-NY) unveiled a Priority Paycheck Program Protection Act, known as the ‘P4’ Act, which seeks to extend the PPP loan period until the end of the year and make the option for a second PPP loan is eligible for small businesses that need additional assistance to operate.
With representatives from both sides agreeing that more PPP assistance is needed, additional funding for small business seems likely as Congress can reach consensus on a second incentive package.
Read more: Use Forbes Advisor’s in-depth tool to search for all PPP loans of $ 1 million or more.