By SARA KOLINOVSKY and CHEYENNE HASLETT, ABC News
(WASHINGTON) — At the end of the day Tuesday, small business owners will be locked out of approximately $134 billion in Paycheck Protection Program funds and despite the midnight deadline to apply for a forgivable loan through the program, it doesn’t appear Congress is poised to do anything to ensure the funds will remain available.
The Paycheck Protection Program (PPP) is a cornerstone effort of the government’s emergency coronavirus economic relief plan. Nearly 4.8 million loans have been granted to small businesses faced with shutdowns due to the pandemic, totaling more than $518 billion, according to the Small Business Administration. The loans are forgivable if businesses meet a few guidelines, including using 60% of the loan to keep employees on payroll.
But Congress has allocated an additional $134 billion for the program that businesses have not been able to access, for a variety of reasons.
In order for businesses to be able to apply for that money in the coming weeks, Congress would need to pass legislation to either extend the deadline for the program, or create the next phase of the program. It seems unlikely that either effort will succeed Tuesday, to ensure the funds are continuously available, and it’s also unclear if either effort will succeed before a two-week congressional recess for the July 4th holiday kicks off.
“Chairman Rubio has reconvened the bipartisan small business task force to work towards an agreement on the next phase of support for small businesses. The bipartisan task force is currently working towards consensus on a final agreement on a deal,” Senate Small Business Committee Chairman Marco Rubio’s office said in a statement to ABC News Monday.
Sen. Ben Cardin, D-Md., the ranking member on that committee, has proposed legislation that would allow the smallest of small businesses to obtain a second round of PPP funding, and extend the application deadline through December, or whenever Small Business Administrator Jovita Carranza sees fit. The idea is to target the businesses that still need help: minority-owned businesses, businesses with fewer than 100 employees and industries like hospitality and retail that have yet to recover since receiving the initial round of PPP loans.
Treasury Secretary Steven Mnuchin testified Tuesday that there’s bipartisan support to extend PPP and target it to the most hard-hit businesses. He said expects legislation by the end of July, which means there will be a lapse in the program from July 1 until it is passed.
“I think that there’s, there appears to be bipartisan support in the Senate to repurpose the $130 billion for PPP, extending it to businesses that are most hard hit, that have a requirement that their revenues have dropped significantly — things like restaurants and hotels and others, where it is critical to get people back to work,” Mnuchin said.
“I’ve already had conversations with the SBA committee in the Senate about repurposing that hundred $135 billion and think that should be done, and look forward to working with both the House and the Senate so that we can pass legislation by the end of July,” he said.
The fact that billions are still available does not necessarily indicate small businesses have no need for it. For many small businesses, especially those run by sole proprietors or in economically disadvantaged areas, which may not have access to accounting professionals or experience obtaining loans, the process to receive PPP funding was, and continues to be, daunting. Other small businesses were hesitant to apply for the loans as forgiveness guidelines shifted multiple times, and the prolonged pandemic meant many businesses felt they could not meet the 60% payroll threshold.
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Though need still exists for the money, it does not simply get re-absorbed or rolled over for any other SBA programs, according to the agency. Congress must decide how to re-appropriate it.
“Congress and the Administration will consider proposals of how to use the remaining funds. The dollars appropriated for the PPP do NOT get rolled over to regular SBA 7(a) loan funding [SBA’s loan program that existed before COVID] or any other SBA program,” a regional spokesperson for the SBA told ABC News.
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