Ahead of Small Business Loan Deadline, $134 Billion Remains
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What is the Paycheck Protection Program deadline and how much money remains unclaimed?
Here's your money briefing for Tuesday, June 30th. I'm J.R. Whalen for The Wall Street Journal. Today's the deadline for small businesses to apply for pandemic rescue funds under the Paycheck Protection Program. Demand was high when the program was first rolled out, but there's still about $134 billion up for grabs.
Some people say that the PPP left behind a lot of most vulnerable businesses, but others say that it really helped businesses keep workers employed and cover some of their costs of operations when they were hurting really badly.
So why are so many business owners reluctant to apply?
Why were people surprised that $134 billion in PPP funds remained?
And what will happen to any leftover money? Our reporter Yuka Hayashi will explain after the break.
Since the start of the pandemic, Congress has allocated more than $600 billion in small business rescue funding. The deadline to apply for the forgivable loans is today, but about $134 billion remains unclaimed. Let's bring in our reporter Yuka Hayashi for more details. So Yuka, were people surprised at how much money is left over?
Yes, if we asked people two months ago whether there would be leftover money in PPP, they would have said no way. But in the past month and a half or so, demand has been very weak, slow for this program.
There's a lot of money left over, but still many businesses are struggling.
A lot of business advocates are concerned that the impact of the pandemic is going to linger, and that would make a lot of businesses unviable, unable to survive the crisis. So, you know, they won't be around on the other side to hire people. Regardless of what's left in the PPP fund, It has been very clear that a lot of small businesses still need money.
Why are some small businesses reluctant to apply for PPP loans despite eased rules?
And that concern is only growing because of the resurgence of confirmed cases.
Now, recently, Congress eased some of the restrictions on businesses seeking loans. But yet some businesses are still reluctant to apply. Why is that?
Some are concerned that even with those changes, their loans may not be forgiven and they will end up with debts that they cannot afford to pay back. And some others may not be just simply aware that this program exists. And that could be particularly true among very, very small businesses. So this program is designed so that as long as businesses spend a majority of the funds on payrolls to pay workers or rehire workers, most of the loans are going to be forgiven and turn into grants. Despite that, partly because of repeated changes in regulations and some uncertainties left as a result of these changes, some businesses are still concerned that their loans may not be forgiven.
How effective was the first round of PPP funding at preventing layoffs?
Now, this leftover money is part of the second round of funds earmarked for small businesses. How effective was the first round in preventing layoffs?
We must say that the jury is still out. Some people say that the PPP left behind a lot of most vulnerable businesses, but others say that it really helped businesses keep workers employed and cover some of their costs of operations when they were unemployed. Is it likely that the leftover money would still be available to small businesses?
What proposals exist for allocating leftover PPP money and changing forgiveness rules?
Democrats have already proposed bills calling for that, focused on smaller businesses, businesses with 100 employees or less. And ones that have been hit particularly hard by the pandemic to receive a second fund under this program. Today, two senators are expected to propose new legislation that will make PPP program a little more useful and friendly for businesses. And this bill allows all loans that are $150,000 and less to be forgiven automatically instead of banks. and the government making a close evaluation of their forgiveness applications.
All right, that's Wall Street Journal reporter Yuka Hayashi. Yuka, thanks for coming on the show.
Thanks for having me.
And that's your Money Briefing. I'm J.R. Whelan for The Wall Street Journal.
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Chapters
5 chapters
1
What is the Paycheck Protection Program deadline and how much money remains unclaimed?
0:05–0:43
2
Why were people surprised that $134 billion in PPP funds remained?
0:43–2:07
3
Why are some small businesses reluctant to apply for PPP loans despite eased rules?
2:07–3:17
4
How effective was the first round of PPP funding at preventing layoffs?
3:17–4:00
5
What proposals exist for allocating leftover PPP money and changing forgiveness rules?
4:00–5:01
Speakers
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