There’s Still Over $125 BILLION PPP Small Business Loans Available: Here’s Why

Allie

9 months ago

Nearly two weeks after launching round two of the Payment Protection Program, there’s still more than 40% of the $310 billion that was approved left for small businesses and self-employed available. The original taxpayer-backed program ran out of funds in less than two weeks when it was first launched. Here’s why demand is down for the taxpayer-backed loans and why your small business may still have time to apply.

Over $125 BILLION PPP Small Business Loans Available: Here’s Why

When the federal government relaunched its small business loan program April 27 with an additional $310 billion, lenders and small business advocates warned the program would run out of money quickly.

Now, nearly two weeks later there’s still over 40% of the $310 billion available for small businesses and the self-employed (sole-proprietorships). This means there’s at least $125 billion left for these businesses to take advantage of before it’s all gone again.

This comes even as many small businesses continue to suffer from the economic shutdown caused by the global coronavirus pandemic.

Lawmakers and small business owners warned the same would likely hold true during the second round of PPP funding, which relaunched on April 27, after Congress added another $310 billion in the now $660 billion forgivable taxpayer-backed loan program.

Why Is Demand Down For PPP Small Business Loans?

1. Public Outcry, Reputation Management

The reasons demand is down for the Payment Protection Program is partly due to public outcry over big, multimillion-dollar companies swallowing up huge chunks of funding during first round.

Over 300 publicly traded companies applied for and received the taxpayer-backed loans. The biggest chunk of the program went to a Dallas-based hotel conglomerate who applied for $126.4 million in PPP loans. These loans are forgivable if certain conditions are met, such as keeping staff on board.

FactSquared: ENTIRE LIST OF PUBLIC COMPANIES THAT APPLIED FOR PPP SMALL BUSINESS LOANS – INCLUDING WHAT COMPANIES ARE RETURNING THEM

Some elite private schools with large endowments received significant multimillion-dollar PPP loans, including the Los Angeles private school U.S. Treasury Secretary Steven Mnuchin sends his own two children. Mnuchin said that private schools with large endowments should return the loans.

It was recently discovered that more than 12,000 churches applied for PPP loans and at least 9,000 got them. Some of the loans went to mega-churches. According to a new survey by Nashville-based LifeWay, half of the pastors at churches that average 200 or more attendees said their church applied for a loan, compared to only a third of churches that average fewer than 50 attendees. Another survey by the same group says the vast majority of pastors see the end times in current events.

2. Big Loans Subject To Automatic Audits, Criminal Liability

At least $1.2 billion has been lent to publicly traded companies so far. At least $350 million has been returned after U.S. Treasury Secretary Steven Mnuchin said it was unlikely that businesses with access to capital would be eligible for the loans. May 14 is the new deadline to return loans with no questions asked. Mnuchin said all loans over $2 million would be subject to an automatic government audit and criminal liability.

“Before we forgive these loans, we’ll check every single one over $2 million,” Mnuchin told FOX Business. “So anybody that took the money that shouldn’t have taken the money, one it won’t be forgiven, and two, they may be subject to criminal liability, which is a big deal.”

3. Uncertainty Over Forgiveness Terms

Another reason there’s still demand for the program is that some small business owners are worried that the loans won’t get forgiven as the government has changed terms of the program several times since it originally launched in early April.

In order for the money to eventually be forgiven by the federal government, owners must spend at least 75 percent on maintaining payroll.

The remaining 25 percent? It can be spent on qualifying operating costs like rent and utilities, but it cannot go towards mortgage principal or pre-payments. Non-qualifying expenses must be repaid at 1% interest within two years.

4. PPP Loan Forgiveness Eligibility Terms For Rehiring Workers Quickly

There’s also uncertainty on how quickly companies must rehire workers. Some small businesses say the economy just hasn’t improved enough yet for them to rehire workers at the same rate before the coronavirus crisis.

“Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels,” the Small Business Administration said on its website. “Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.”

5. Bad Experience In First Round Of PPP Loans

Some business owners are looking elsewhere for aid because they had a bad experience the first time around and don’t think they’ll actually be able to get a loan in time to save their business. There’s mounting evidence that big banks shuffled the PPP small business loans in order to make the bigger commissions. This left millions of small business owners out of luck.

6. Confusion Over Who Is Eligible To Receive PPP Loans

Many self-employed, sole proprietorships aren’t sure they are even eligible to apply for the completely forgivable loans due to confusion during the first round and circulating theories on social media. As long as you meet the Small Business Administration’s guidelines for the loans, you should apply.