New Rules, Later Deadline for Small-Business Loan Program
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What is the main topic discussed in this episode?
Here's your money briefing for Wednesday, July 8th. I'm Charlie Turner for The Wall Street Journal. Small businesses that have been hurt by the pandemic are getting another chance to apply for loans from the federal government.
Businesses that maybe didn't want a PPP loan a month ago or think they didn't need it a month ago could need it now. So Congress wanted to give them more weeks to take advantage of that program if they could.
That's our reporter Peter Rudiger.
What deadline did Congress set for the new PPP application period?
After the break, he'll give us an update on the latest changes to the Federal Paycheck Protection Program.
Small business owners who haven't yet applied for a loan under the Paycheck Protection Program now have another shot. Congress extended the program for a third phase of forgivable loans, but the PPP has been tweaked a lot along the way. Joining us now for a status update is our reporter, Peter Rudiger. First of all, Peter, what's the new deadline to apply for PPP loans?
So small businesses now can apply until August 8th for a PPP loan, before the deadline was June 30th. and remind us why Congress extended the deadline. So there are two main reasons.
Why did lawmakers extend the PPP deadline to August 8th?
One, there was around $130 billion left in the PPP coffers at the end of June when it was set to expire. And rather than just let that money sit idle or go back into the Treasury for other purposes, Congress wanted to make that available to small businesses that need it. And the second was the economic picture looks very different today than it did in March. Remember all the way back then when this passed Congress, there was a thought this would be a bridge for small businesses until the economy reopens. Eight weeks should be plenty of time. The economy should be back on its footing and businesses can start bringing staff back and pay them for work done. Now you have states like Texas and Florida, you know, pausing reopening, reversing course.
Businesses that maybe didn't want a PPP loan a month ago or think they didn't need it a month ago could need it now. So Congress wanted to give them more weeks to take advantage of that program if they could.
We've talked on the show before about various issues with the PPP program. Let's get an update on a few of them. The requirements for having a loan forgiven have changed. Why is that?
That's right. There are new requirements for getting a loan forgiven. It used to be you had to spend 75% on payroll. Now that requirement is lowered to 60%. And that was changed because there are a lot of businesses and high cost places like New York or Los Angeles or cities where the rent payments were extremely high. And it just if they could only spend 25 percent of the loan on non payroll expenses, that didn't do them any good.
What changes were made to PPP forgiveness rules and payroll requirements?
So Congress heard those cries and relaxed the requirement for how much you had to spend on payroll. The second is extending the amount of time you have to pay back or to use the PPP funds rather to 24 weeks from eight weeks. So there were a lot of businesses that got the loan beginning of April when the first batch was available. again, thought they might be ready to reopen in eight weeks, spent the money with that in the back of their heads, and lo and behold, eight weeks comes and goes and the businesses couldn't reopen. And you have people thinking, well, maybe I would have spent the money differently if I knew I could spend it over 24 weeks, they didn't have to front load at all and be left in the situation where I laid off my people once, I brought them back to work, it's eight weeks are over and I don't have any money to pay them, I have to lay them off again.
So Congress wanted to avoid that scenario from happening again.
We also talked about how business owners with criminal records were barred from getting a loan. Has that changed?
That has changed. So it used to be if you had at least a 20% stake in a business and you had been convicted of a non-financial felony in the past five years, you were ineligible for a loan.
How was the PPP covered-period extended from 8 weeks to 24 weeks and why does that matter?
They've relaxed that period to just one year. So if you had a felony in your past, again, non-financial in nature,
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:06–0:30
2
What deadline did Congress set for the new PPP application period?
0:30–1:16
3
Why did lawmakers extend the PPP deadline to August 8th?
1:16–2:42
4
What changes were made to PPP forgiveness rules and payroll requirements?
2:42–3:49
5
How was the PPP covered-period extended from 8 weeks to 24 weeks and why does that matter?
3:49–6:01
6
How did eligibility rules change for business owners with criminal records?
6:01–7:20
Speakers
2 identifiedMore from WSJ Your Money Briefing
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