Starting a small business is a long, often complicated process – and owners have to work constantly to ensure they are successful. When their doors closed back in March in response to COVID-19, these businesses needed assistance so this closing was not permanent. The government stepped in, and provided aid in the form of PPP loans. The Paycheck Protection Program loaned funds that primarily kept employees of small businesses paid.
Loan forgiveness will be granted to businesses who abide by the restrictions and guidelines that came with these funds. This was a weight lifted for small businesses, as they would not have to pay back the aid provided. Employee paychecks were the main use of this restricted spending, which made up about 60% of the loan’s allocation.
With fall quickly approaching, the United States still faces many of the problems that began in the spring. The need for assistance has not disappeared; as a response, the Senate is currently debating the HEALS Act (Health, Economic Assistance, Liability Protection and Schools). Part of this bill would include a second period for application and distribution of PPP loans. Businesses that received aid in the first round of funding are eligible to apply again for continued relief.
Several key adjustments would be made to this potential extension of PPP loans. For example, these funds would mostly help businesses smaller than 300 employees. An additional restriction is proof of a decline in revenue this year as a result of the coronavirus pandemic. The guidelines for this loan would allow businesses to purchase PPE for employees, such as masks and cleaning products. New PPP loans would have the same focus of keeping employees paid, with the reward of loan forgiveness if businesses follow restrictions. This possible funding is still unknown, as Congress will continue to debate the HEALS Act in early August.
The future remains unpredictable, but banks and small businesses will continue to monitor decisions made by the Senate. Local banks such as Embassy are ready to help small businesses through another application process and get back to business as usual. Local businesses are essential in every community, and PPP loans encourage their survival during these difficult times and beyond.