The US government’s massive emergency loan program for small businesses hurt by the coronavirus pandemic is set to stop taking new applications Tuesday night even as money remains undistributed and economic fallout continues.
The Paycheck Protection Program has about $134 billion — or about 20% of the total $670 billion in funding designated for borrowers that was authorized by Congress — remaining in its final hours, after several rounds of changes and a rocky rollout.
When first launched as part of the sweeping CARES act in March, companies applying for aid reported confusing guidelines (which allowed some massive, publicly traded companies to access funds), technical glitches in bank application systems, and other snafus. After backlash, the Treasury Department announced it would relax forgiveness rules, more closely review applications for larger amounts and publicly condemned those who took loans when they had access to other sources of credit and liquidity.
Now, with names of businesses receiving more than $150,000 set to be released this week, there’s debate over what to do with the remaining funds, especially as there’s no end in sight for the pandemic.
“We need to be focused on keeping as many businesses viable as possible so as the economy reopens — we can see that’s already going to happen in fits and starts — that they are able to start to regrow and repurpose themselves,” John Arensmeyer, head of the Small Business Majority advocacy group, told The Wall Street Journal.
In some states where new cases of COVID-19 are surging, like Arizona and Texas, re-opening plans have been paused or rolled back entirely. That’s thrown even more chaos at business owners who’ve seen demand crippled in recent months by stay-at-home orders.
Congress is debating how to further aide the US economy, which is still reeling from record unemployment that’s likely to get even worse. A survey by the National Federation of Independent Business found as many as 14% of small businesses anticipate having to lay off workers when their PPP loans run dry. More than half of the respondents said they need more money. One floated option includes allowing businesses a second loan, though many Republicans have opposed further aid, especially to the unemployment benefits, which end July 31.
Earlier in June, Mnuchin told Congress that more aid would likely be needed.
“We’re going to use all of our fiscal tools to work with Congress to restore this economy to where it was,” Mnuchin told a committee. “I definitely think we are going to need another bipartisan legislation to put more money into the economy.”
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