Restaurants and retailers have applauded recent changes in the government’s $670 billion small business rescue program that make it easier for companies battling the COVID-19 pandemic to qualify for loan forgiveness. But the increased flexibility has come late for scores of small businesses that followed the Paycheck Protection Program’s original rules — and quickly used up most or all of their money, the Wall Street Journal reported. Rising numbers of COVID-19 cases in Florida, Texas and other Sunbelt states have disrupted many reopening plans. The PPP has provided a lifeline for many small companies struggling to stay afloat during the pandemic. It also encouraged businesses to make spending decisions that sometimes weren’t in their best interests, some owners say. To qualify for forgiveness, many prioritized speed over efficacy. Now, with much of the money spent and the economy still hobbled, some are finding that they would have been better off had they not followed the program’s original requirements in an effort to make sure their loans would be forgiven and instead gambled that the rules would change. Changes to the PPP that were signed into law in early June extended the time frame for using PPP funds to 24 weeks from eight weeks and allowed businesses to spend 60 percent instead of 75 percent of their loan on payroll and still qualify for forgiveness. The looser requirements followed complaints the program wouldn’t provide much help to restaurants, retailers and other small businesses that remained closed or were slow to reopen, or to companies that had high costs for rent and other fixed expenses. The new rules came two months after the program’s launch. By then, 4.5 million PPP loans totaling $511 billion had been approved, according to the Small Business Administration. Nearly half of businesses that received PPP loans before the end of May have already passed the original eight-week deadline for spending the money to qualify for loan forgiveness, according to a recent survey from the National Federation of Independent Business. Read more. (Subscription required.)
In related news, Americans will soon get a first full look at which businesses received $515 billion of taxpayer funds when the government, after initial resistance by President Donald Trump’s administration, releases borrower data for one of its highest-profile pandemic aid efforts, Reuters reported. The colossal data set for the Paycheck Protection Program, to be released by the Treasury Department and Small Business Administration in the coming days, will provide transparency for a first-come-first-served program that from the outset was plagued by technology, paperwork and fairness issues. That could make life uncomfortable for borrowers that broke the spirit or letter of the rules, and for banks that shoveled the money out the door. The aim of the $660 billion program was to help cash-strapped companies keep workers employed and make rent. The Treasury and SBA said they will release a swath of information, including the names, addresses, loan amount ranges and jobs supported for businesses that received $150,000 or more. That should account for roughly 75 percent of the dollars granted, but only 15 percent of the 4.7 million loans. The agencies have not said when they will release the data. Read more.
