What to know about the future of the Paycheck Protection Program
01 July 2020
The Senate last night voted to extend the application period for Paycheck Protection Program loans through August 8, just hours before it was set to expire.
Why it matters: There's still over $130 billion in PPP funds available, which could help small businesses pay overhead and keep employees on payroll. It also could help independent contractors like Uber drivers.
Why it doesn't matter: The application period can't be extended until the House passes the Senate bill and President Trump signs it into law. But, more importantly, it's unclear that there's much demand for this money.
- My understanding is that Treasury and the SBA originally calculated that there could be up to $600 billion in total demand for PPP funds, based on their payroll calculations of U.S. small businesses. So far it's approved around $520 billion in loans, not including around $38 billion that was returned or otherwise canceled, which is a pretty heady percentage.
- Remember, some small businesses — like grocers — experienced a surge in business from the pandemic, so never applied.
- Some applicants got shut out in the PPP's early days due to bank prioritization, and have since gone out of business. Plus, some major lenders like Wells Fargo stopped taking applications months ago, despite the available funds.
What's actually needed: A serious discussion about PPP 3, particularly as major states pause or scale back their economic reopening plans.
- This would be a new program available to small businesses that already received initial PPP loans but still face severe economic hardships.
- It also could be a more efficient, fairer, and more transparent process — given what's been learned over the past three months (including loan recipient data, which is expected to be released by EOD tomorrow).
The bottom line: PPP was designed as a bridge to the summer, but the other side is a much cooler season. Last night's Senate action only added a few feet of new asphalt, with miles still needed.