A minimum of $20 billion in Paycheck Protection Program (PPP) loans have been canceled — many by small businesses afraid they can’t spend the money in ways that will qualify for loan forgiveness, calculations of Small Business Administration (SBA) data by Bloomberg found. SBA reports indicate $510.5 billion in the net amount of approvals on Thursday (May 28), which is roughly $2.7 billion less than that of the period ending May 16.
Those in charge of the program, the Treasury Department and the SBA, have not offered a complete picture of cancellations. Some of the them are from bigger publicly traded firms that returned hundreds of millions after criticism of taking away help from small businesses and the potential of an audit for loans exceeding $2 million.
Advocates for small companies, however, forecast that the largest share of the cancellations are from firms giving back their loans as they are uncertain if they can spend the money in the forgiveness timeframe of eight weeks, worried about an audit or are not certain about the rules.
Businesses that received funding at the time of the program’s rollout on April 3 have the ability to start requesting loan forgiveness beginning on Friday with a sophisticated procedure that lenders, as well as small business advocates, want to see become less complex.
The news comes as a measure that would make it easier for small businesses to receive a forgivable federal loan has cleared the House easily. The bill satisfies a request from entrepreneurs who sought to have legislators decrease the portion of the PPP loan that has to be used on payroll from 75 percent to 60 percent.
A second change allows borrowers to take as long as half of a year to use the funds, which is higher than the two months put forward in the first bill that was passed in March. Small businesses have said the initial legislation hadn’t made sense, as many required money for rent and other expenses the pandemic caused.
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