The small business Paycheck Protection Program (PPP) still has $120 billion available as the appetite for the forgivable loans slows down, according to recent Small Business Administration (SBA) data.
The second round of the program was launched with an additional $310 billion on April 27. The SBA will forgive PPP loans if 75 percent of the money is used to keep all employees on the payroll for eight weeks. Funds can also be used for payroll, rent, mortgage interest or utilities.
The first round of funding that opened April 3 with $350 billion was depleted in under 14 days.
“The Paycheck Protection Program is working. Small businesses are keeping their employees on payroll and earning salary,” said Steve Bulger, SBA Atlantic Regional Administrator who oversees the federal agency’s operations in New York, New Jersey, Puerto Rico and the U.S. Virgin Islands.
“For this federal program to work for you and your employees, I encourage you to submit an application through a PPP participating bank, credit union, CDFI or online lender,” he added.
Marco Rubio (R-Fla.) tweeted that demand for loans has cooled for two reasons: “1: Lack of clear guidance yet on exemptions from requirement that 75% be used for payroll in 8 weeks. 2: Scrutiny over what businesses received loans turned into hysteria & is scaring many from applying.” Rubio is the Republican chair of the Senate small business committee.
During a CNBC interview on Monday (May 11), Treasury Secretary Steven Mnuchin said the government is “very sympathetic to all the workers who this is impacting.”
He said that many restaurants have expressed that “they’d really like to hold the money. They can’t do that; that’s not something we can do. But we’ll look at a technical fix.”
One reason SMBs might be reluctant to apply for PPP loans is the fear of being audited and deemed ineligible for loan forgiveness. According to the Treasury’s new guidance, the government will now potentially audit all PPP loans, with a special interest and attention to firms that took loans for more than $2 million to see if they really “needed” the money. But what “really needing” the money means, a recent PYMNTS panel conversation on the subject revealed, is far from clearly defined.