The U.S. Senate unanimously passed a five-week extension of the Paycheck Protection Program (“PPP”). This news was announced late in the day on June 30th, which was the original deadline for taxpayers to apply for a PPP loan. The U.S. House of Representatives joined the Senate in passing by unanimous consent and the bill now goes to President Trump, who is expecting to sign it. The extension is intended to give “small businesses” until August 8th to apply for the remaining funds allotted for PPP funding.
Senators on both sides of the aisle have already expressed that, while they support an extension of the PPP, passing a second round of PPP loan funding remains a goal. Quoting Sen. Marco Rubio (R-Fla.): “What we need to pass very soon is targeted help for those who need a second round of aid.” Sen. Chris Coons (D-Del.) tweeted that extending the deadline was important, but a priority should be passing a second round of PPP loans to aid the smallest businesses with the most need.
As of the end of day on June 30th, almost 5 million loans had been approved under the PPP, amounting to over $500 billion of liquidity being pumped into the economy in a response to the COVID-19 pandemic. The loans are available to eligible “small businesses”, generally defined as having less than 500 employees (with some exceptions). Popularity of the PPP has been high since the loans, as authorized under article 7(a) of the Small Business Act, are forgivable if used for approved purposes. The loans are capped at $10 million per borrower and are based on the borrower’s historical payroll costs. The loans are intended to be used by borrowers to cover payroll, mortgage interest, rent, and utilities. The Treasury department has eased the original restrictions on how much of the funds must be used to subsidize payroll in order to be forgiven, making the loans even more flexible and attractive to borrowers. When the PPP guidelines are met, the entire loan amount is eligible to be forgiven, thereby in effect acting more as a government “grant” if that the case.
HPG will continue to monitor and provide any updates on any PPP changes.