The clock on PPP funds was set to run out on June 30th. However, the Senate has voted to extend this deadline now to August 8th. And yet many are saying that even this longer deadline might still not be enough to enable some small businesses to survive.
The Paycheck Protection Program was originally designed as a forgivable loan that could help businesses cover payroll expenses along with overhead costs for eight weeks. Since its inception, the eight weeks have been expanded to 24 weeks. Beginning in April, the program has given out over 520 billion in PPP funds to struggling businesses.
What experts are suggesting is that those who direly needed the funding likely already got it and need more of the same—the extended deadline doesn't help companies in that type of situation. The second wave of PPP funding still has yet to be completely spent down. According to the SBA's recent numbers, approximately 134 billion remains in the program.
Financial analysts are saying that beyond extending the deadline more needs to be done to help America's ravaged businesses. While lengthening the amount of time a business had to spend money was a good start as well as requiring only 60% to be spent on payroll, it is still not enough of a lifeline to those who are otherwise looking at having to close up shop for good. Especially since those businesses who followed the initial guidelines ultimately ended up getting the short end of the stick when those guidelines were adjusted.
So for instance, those who applied in the first month used up all the money in 8 weeks and used the bulk of it for payroll; they are now consequently hurting. And as it stands, they cannot apply for any additional funding through the program.
Accountants are suggesting that new legislation be introduced that would do even more for small business owners. One option some businesses still may have might be the Economic Injury Disaster Loan program. The EIDL cannot be gotten at the same time as the PPP loan, however, when the PPP funds run out, a company does have a chance to apply for more funds through this EIDL program.
Short of this, however, there seem to be very few options for business owners who are seeing only dark days ahead. Local and state aid packages and loans may be an option for some—but there again, if a business has already tapped into these resources they are likely out of luck. Many businesses sadly are now having those honest conversations with their employees regarding the future of the company. And for numerous owners, the situation does not look good—despite any extended deadlines.
First Union Lending can help. If you haven't yet applied for a PPP loan and still wish to do so, we can walk you through the process. Our goal is to see our clients make it through this and ultimately thrive. Call today and let's get started!