Tags: small businesses | ppp | loans | rule | changes | virus

Small Businesses Slow to Claim $130B of PPP Virus Loans Amid Rule Changes

Small Businesses Slow to Claim $130B of PPP Virus Loans Amid Rule Changes
(Kilmermedia/Dreamstime)

By    |   Friday, 12 June 2020 08:38 AM

Constantly evolving guidelines around loan forgiveness reportedly could be a contributing factor behind the reluctance of small businesses to take the $130 billion still available from the government's Paycheck Protection Program.

The PPP program, which offered forgivable loans to small businesses that use most of the funds to maintain payrolls, supported 50 million workers, according to Treasury Secretary Steven Mnuchin. He cited data from the National Federation of Independent Business, which said that 73% of its members rehired or retained workers because of the PPP, Bloomberg reported.

The initial round of $349 billion in PPP funding was exhausted after just 13 days in April. But there was more than $130 billion still remaining as of June 6 from the second tranche of $320 billion, according to SBA.

Mnuchin said he expects there will be PPP funds remaining when SBA stops accepting new applications on June 30 and that he’s open to working with Congress to re-purpose that money, Bloomberg said.

However, the confusion and uncertainty may have made many small businesses wary.

“It’s like they’re building the airplane while it’s in the air,” Albert Campo, CPA and managing partner at AJC Accounting Services in Manalapan, New Jersey, told CNBC.

Borrowers who use less than 60% of PPP proceeds on payroll will be eligible for partial loan forgiveness. There had been questions about whether those borrowers could get any forgiveness because of the language in legislation relaxing the rule that 75% of proceeds had to be spent on payroll, Bloomberg said.

“Clients are more concerned about how they can use the money to make sure they satisfy the forgiveness requirements,” said Campo. ”‘How do I use it so I have it forgiven?’ is the primary question, and the goal posts keep moving.”

Business owners who are uncertain about whether to apply for PPP cash have a new worry on the horizon: Incoming PPP loan applications must be approved by June 30.

Finding another willing lender also might be difficult.

“Not many banks are offering the loans anymore because they’ve either hit their internal cap or there isn’t enough time to get things processed,” Campo told CNBC. “If you’re waiting and you’re looking to apply, you might have a week left, tops, to get it all together,” he said.

Meanwhile, the Trump administration doesn’t plan to release details about companies that received billions of dollars through a high-profile federal coronavirus-relief initiative, Mnuchin said this week -- reversing earlier guidance.

The Trump administration believes names of borrowers from the PPP and the amounts they receive are “proprietary,” and “confidential” in many cases, Mnuchin said Wednesday during a Senate committee hearing, Bloomberg said.

But the applications for PPP loans, which are forgivable if borrowers meet certain criteria, say such data will “automatically” be released. Moreover, the Small Business Administration, which oversees the lending program, told Bloomberg News in April that such loan-specific information would be made public “in the near future.”

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Constantly evolving guidelines around loan forgiveness reportedly could be a contributing factor behind the reluctance of small businesses to take the $310 billion still available from the government's Paycheck Protection Program.
small businesses, ppp, loans, rule, changes, virus
487
2020-38-12
Friday, 12 June 2020 08:38 AM
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