The federal government’s Paycheck Protection Program (PPP) just wasn’t enough for a lot of smaller businesses, based on a recent survey by lending marketplace Fundera.
Of the 526 small businesses Fundera surveyed during the majority of June and July, 55% responded their PPP funds didn’t stretch far enough to pay for expenses and other needs. Inside a different question, over 80% of business owners told Fundera that they’ll apply for another financial relief program should one become available.
“The PPP continues to be an important lifeline for a lot of small business owners and their employees,” wrote Fundera’s partnership editor Eric Goldschein. “That said, with the pandemic not even close to over — and in many places, still not reaching its peak — it’s imperative that the government listen to the needs of businesses that are struggling, even now, to survive.”
The PPP was introduced on April 3rd included in the federal government’s CARES package. Since then, it's handed out $520 billion of their $659 billion war chest in order to keep America’s small businesses on life support during the coronavirus pandemic. But besides its failure to adequately cover all of the financial needs on Main Street, this program has received ample criticism for giving money to large chains and failing to adequately serve minority-led businesses.
Unless the government proposes its second 11th-hour extension, the first rendition of the PPP officially comes to a detailed this Saturday, August 8.
Fundera’s survey also exposed the convoluted nature of the PPP’s forgiveness process — over 40% of respondents said they don’t fully understand how to seek forgiveness on their own loans. Regardless of this confusion, however, business owners want to get forgiveness on their own PPP loans — more than 96% said they’d request full forgiveness.
With this type of confusing process, tools like the one recently created by AICPA and Biz2Credit aim to make the forgiveness process easier. The idea of universal forgiveness for PPP loans within specific amount (such as $150,000) has also been gaining interest in recent weeks, which could ease the burden for already over-strapped small businesses.
Another Round Of presidency Aid Looks Likely
Fortunately, lawmakers appear keen to help businesses by helping cover their another round of federal funding — although differing opinions are delaying the procedure.
Last week, Senate Republicans, led by Marco Rubio (R-Fla.), introduced their arrange for a brand new round of business aid. This proposal includes allowing financially stricken businesses with less than 300 employees to dip into the PPP again in addition to simplifying forgiveness for all those with PPP loans below $150,000.
“Congress will need to take action to help industries and businesses, especially minority-owned smaller businesses and people in low-income communities, that have been hit hard by the COVID-19 pandemic,” Rubio said in a written statement.
However, critics feel that Rubio’s proposal doesn’t stretch far enough — notably, in the failure to aid more mid-sized businesses.
“We’re having a debate about the eligibility of businesses,” Sen. Michael Bennet (D-Colo.) told Politico. “Partly, that might be based on the jurisdiction of the Small Business Committee, that we respect and that i appreciate. … There are a lot of businesses that aren’t the smallest businesses that have gotten clobbered here, and they use a lot of people.”
Bennet and Sen. Todd Young (R-Ind.) have previously introduced their own bi-partisan proposal, labeled the “RESTART Act.” This bill suggests offering government-backed loans for businesses with up to 5,000 employees. Loans could be at least partially forgivable and would cover up to six months of payroll, benefits, and fixed operating expenses. Unlike Rubio’s proposal — which requires eligible businesses to have seen at least a 50% revenue decline — the RESTART Act’s aid could be eligible for businesses that have posted just 25%-plus in revenue losses.
Earlier now, a number of top executives from numerous companies — including Starbucks, Google, Microsoft, and Disney — signed instructions backing Bennet and Young’s proposal while pressing Congress to act urgently in providing “longer-term” support for smaller businesses.
Where Else To Look For Funding
With more federal funding coming, most businesses will have to hold back until Congress approves an additional round of government aid.
However, some businesses can always meet the requirements to get loans with the EIDL program, an emergency fund setup by the Sba. Other businesses that haven’t already received PPP funding may still be able to apply for a PPP loan — however, note that this program is closing to applicants on August 8.
