This past Wednesday the Senate passed a bill that eases restrictions previously set in place by the PPP. The overhaul of the program was then sent to the President for his signature. The bill was passed unanimously, showing that Congress is, at last, uniting in a bipartisan fashion—at least to help stimulate the economy and give small businesses a much-needed lifeline.
Essentially, the reform measures applied about the PPP would allow borrowers more time to spend the funds versus the eight-week window which many are finding a difficult requirement to meet. Additionally, it would broaden the terms of the loan as far as what constitutes allowable expenses for forgiveness. As of now, employers have to maintain a certain percentage of payroll for the loan to be forgiven.
The bill passed in the house by a vote of 417 to 1. Initially, getting the bill passed within the Senate looked to be an uphill battle. Several Republicans resisted the new measures proposed at first. Ultimately however it did pass unanimously. Businesses are indeed suffering and while the PPP offers relief, the strings attached have been challenging to say the least.
Thus far the PPP has approved over 500 billion in loans. The key with the program is forgiveness—business owners are fearful of being burdened with debt as they are scrambling to recover because they cannot meet the requirements. The bill is signed by the White House extends the window from eight weeks to twenty-four weeks. This, because Congress finally recognized that while many businesses received funding, some of those businesses are still not up and running or are doing so in a highly restricted way.
Furthermore, the bill will allow for increased flexibility when it comes to how the money can be used to qualify for forgiveness. Currently, the PPP stipulates that 75% must be allocated to payroll expenses. Under this new reform, that number is adjusted to sixty percent, thus allowing companies to spend more of the money on costs such as rent and utilities for example.
As of this week, roughly 120 billion remains in the program. Many lenders feel that with these relaxed restrictions, demand could surge again for the PPP. Some lawmakers are still hesitant in the face of these new measures, citing that money is going to businesses that don't need it and they are also afraid that relaxing regulations could keep the program going longer than it needs to.
Several people in Congress are calling for reform as far as what businesses are being granted the money. As federal debt continues to mount, they are fearful that not enough care and discretion is being taken when it comes to approving the loans.
First Union Lending as always is here to help. If you have not yet applied for a PPP loan and need additional cash, we can assist you with the process. We want to see all of our clients come out of this thriving. Call today!