(as Details on Some PPP Loans Finally Released After Public Pressure)
Senate Makes Last-minute Call to Extend the PPP Deadline:
Hours before the original Paycheck Protection Program deadline was due to expire, the Senate reached a last minute agreement to extend the June 30th deadline until August 8th. It was originally expected there could be some resistance from Democrats but the move was unanimously passed by the senate. Everyone in agreement, it was important that all businesses who needed access to the funding could get it.
The leading democrat on the Senate Small Business Committee, Senator Ben Cardin, had this to say, “We want to make sure the money gets out, and we also want to make sure those who really need it get the funds.”
After the original $350 billion in PPP funding ran dry after just two weeks (by mid-April), the budget for the scheme was extended by a further $310 billion to take the total package to $660 billion. As things stand, there is close to $130 billion in funding still to be claimed, with the rate of new PPP loan applications and approvals drastically lower than when the scheme first launched. With this in mind, one of the major factors influencing the senate was the lack of alternative support schemes passed by lawmakers to continue to assist the American small business community.
Steven Mnuchin, the Treasury Secretary, has said the Trump administration supports legislation to repurpose the $130 billion left in the small-business fund. However, with new schemes not expected to be devised until the end of July, the decision to extend the PPP scheme until at least August 8th made sense.
Loan Restrictions Eased to Improve Accessibility
Prior to the Senate’s decision to extend the deadline on the scheme, President Trump signed into law the Paycheck Protection Program Flexibility Act (PPPFA). The newly passed act has provided a greater degree of flexibility to borrowers and allowed more business owners to be eligible for loan forgiveness through the PPP scheme. Now, borrowers are only required to use 60% of the funding for payroll (down from the initial 75% threshold), allowing businesses to utilise 40% of funds on other eligible business expenses. The loan forgiveness period has also been extended to 24 weeks (up from 8 weeks), or until December 21st, whichever comes first.
It was originally stipulated that small businesses had to re-hire workers by June 30th, in order for their salaries to count towards forgiveness. Under the new act, businesses now have until December 31st to rehire workers in order for their salaries to count towards forgiveness. There will also be no penalty for businesses that were unable to rehire employees. So long as a business can adequately prove it tried to rehire staff but was unable to do so, then it is still eligible for loan forgiveness.
In addition, the PPPFA also eases repayment terms in the event loans or portions of them cannot be forgiven. Rather than the initial agreed period of two years, a business now has up to five years at a 1% interest to repay the loan. Drastically easing the time-period in which firms will feel they can repay the loan. The first loan payment is also set to be deferred for six months from the date the SBA makes a decision on your companies eligibility for loan forgiveness. If we factor in that loan providers are allowed up to 60 days to make an initial decision on loan forgiveness and the SBA has an additional 90 days, it’s likely you’re looking at around May 2021 that companies will be required to make their first PPP loan repayment.
SBA Announces Names of Firms Granted Over $150k Through PPP
The SBA and Congress had yo-yoed on the decision for months but have finally decided to publish details on successful benefactors of the Paycheck Protection Program (for firms receiving over $150k).
Under the usual operating requirements of the standard SBA 7(a) loan program, information on firms who received a loan through the scheme is readily available to the public. When PPP launched, the SBA had originally intended to do the same for firms who were successfully approved under the scheme. The move however, met pressure from the Senate and Mnuchin had this to say, “As it relates to the names and amounts of specific PPP loans, we believe that that’s proprietary information, and in many cases for sole proprietors and small businesses, it is confidential information.”
In one final U-turn however, after significant press and public pressure, the SBA has released data on firms who have participated in the PPP scheme, which you can see here. Whilst the decision not to announce those firms who received under $150,000, perhaps still addresses some of Mnuchin’s concerns.
Business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, name of lender and the number of jobs supported have all been confirmed. Loan amounts however, rather then being specifically announced, have been grouped as follows:
- $350,000-1 million
- $1-2 million
- $2-5 million
- $5-10 million
“Today’s release of loan data strikes the appropriate balance of providing the American people with transparency, while protecting sensitive payroll and personal income information of small businesses, sole proprietors, and independent contractors.” Mnuchin had to say on his concluding remarks on the matter.
For some, the move is not enough, as much ambiguity remains over specific loan amounts and details on firms who received under $150k.
Many have taken the time, however, to take a deep-dive into the existing data. Analysis by the Associated Press has found that, if the low end of the loan ranges is assumed, at least $1.4 billion has been granted to the Roman Catholic Church. The actual figure will lie somewhere between $1.4 billion and $3.5 billion (not including recipients who received under $150,000). The diocese of New York is reported to have received 15 loans worth at least $28 million. While the regions of Knoxville, Tennessee and Covington, Kentucky have received loans valued between $5 million and $10 million.
One of the key differences with the Paycheck Protection Program vs usual SBA loan programs was that nonprofit organisations would be eligible beneficiaries, in addition to small businesses. After significant lobbying by religious leaders, the Trump administration then went above this, to grant religious organisations a unique waiver to the 500-employee cap. So instead of a regional diocese exceeding the 500 cap, all churches, schools, and other religious organizations within each region could apply independently.