PPP Lending Extended Through August To Help Save Small Businesses – Now What’s Next?

Both the U.S. House of Representatives and the Senate have approved a bill to extend commitments for the Paycheck Protection Program (PPP) and separate amounts authorized for other loans under section 7(a) of the Small Business Act. President Trump is expected to sign the bill extending PPP, which makes forgivable loans available to small businesses that have struggled because of the coronavirus pandemic.

What is both intriguing and encouraging is the bipartisan support for the program to aid small business owners. On Tuesday, the measure met unanimous approval in the Senate. The House quickly approved the legislation to get it to the President for his signature.

Related: $2.2 Trillion CARES Act Provides A Lifeline To Small Businesses

When it was passed in late March as part of the CARES Act, PPP received $670 billion in funding through the original legislation and an extended relief package that was passed in April. Since that time, the SBA reports that nearly 5 million loans were made for an amount totaling about $520 billion.

Related: PPP Saved The Day For Many Businesses, Now It Has Been Extended

If you were among the first businesses to receive a CARES Act Paycheck Protection Program (PPP) loan, it is near the time when you can request loan forgiveness.

SBA 7(a) loans have been a major source of small business financing during the past decade, and the agency passed them in record amounts throughout the past decade. Prior to the establishment of PPP, most loans to small businesses were made under the 7(a) program.

The federal government has done a commendable job to help small businesses during the worst economic crisis in America since the Great Depression. Providing cash to small business owners and making the loans forgivable undoubtedly saved many companies from bankruptcy. However, we are not out of the woods yet. Entire industries – restaurants and gyms – remain closed to indoor customers, and, alarmingly, COVID-19 has begun spreading like wildfire across the south and west of the country.

“I’m concerned that the businesses hurt the most – those who have had a 50% drop in revenue compared to the same quarter last year – should be allowed to get a second loan,” said Senator Susan Collins (R-ME), who announced during a webinar hosted by Biz2Credit on July 2 that she is working on legislation that would be introduced at the end of the month.

“PPP loans, under my proposal, could be used for purchases, such as masks and plexiglass shields, that companies need in order to continue operating. For instance, funding could also be used for restaurants to purchase outdoor furniture required for social distancing,” Senator Collins said.

“There is a split among my Senate colleagues over whether additional assistance is needed. I hope to convince our colleagues to continue (providing money to small business). I tell them to talk to the small businesses in their state and ask them whether it is needed,” she added. “I recently spoke with a hotel operator who told me her occupancy rate is usually 94% on Fourth of July weekend. This year, her occupancy is only 6%.”

Senator Collins said some businesses will not be able to survive because the pandemic has not subsided. However, she is hopeful that Congress will pass further legislation to extend aid. She said that PPP has kept businesses alive.

“I am very confident in the ingenuity of small businesses, but I know they need our help,” Senator Collins added. “This is an extremely high priority for me.”

“I have heard concerns about liability. One restaurant owner said he is doing everything according to CDC guidelines. He told me, ‘I am afraid someone will sue me even if there is no proof at all they contracted it at my business’,” she said. “Liability is a big concern for small business owners.”

Passing the original CARES Act bill that established PPP funding provided desperately needed security to small business owners. They are a lot different from the stock market, and many of them are hurting. I am encouraged by Senator Collins’s efforts to create a second PPP bill that addresses the financial requirements of social distancing regulations.

History will record whether the stimulus package was enough to save the small business ecosystem during the pandemic. Certainly, both political parties worked quickly to throw a lifeline to literally millions of small business owners — and their employees — who otherwise would have no income. The Treasury Department and the SBA have kept money flowing into the hands of small firms. How much longer they will need the assistance remains to be seen. Until people build up immunity or a vaccine is developed, the economy will continue to suffer because of the uncertainty caused by the coronavirus.