Changes Being Considered For the Paycheck Protection Program

Legislators are weighing in on how to change the Paycheck Protection Program after the demand has slowed considerably for the government assistance program for businesses.

Currently, there is $120 billion left in the second round of the PPP programming, according to Entrepreneur, which was re-upped after the first round of $350 billion relief was claimed in less than two weeks. Since the program was infused with $175 billion in new money on April 27th, money is still available showing the cooling demand for the program. reported that loans have dropped from an average of $200,000 in phase one down to $73,000 in the second round from a National Small Business Townhall.

A recent survey issued by Bar & Restaurant, American Spa, and American Salon, found that 16.7%, 27.7%, and 23.2%, respectively, of businesses had no plans to apply for the program.

Changes to the PPP program include extending the time to spend the money from the original eight weeks to up to 24 weeks. Nearly every state was shut down between mid-March and early April by government mandate and while roughly 75% of states have loosened stay-at-home orders, many restaurants, salons, retail shops, and other consumer-facing businesses continue to face restrictions to curb the spread of COVID-19.  

As reported by the Wall Street Journal, Senator Ben Cardin, of Maryland, has said, “When we conceived the program, we thought businesses would be able to get up and running after eight weeks, but we know now that's not the case.”

In addition to adding extra time, legislators are seeking for more flexibility for the 75% of funds that were required to be spent on payroll. This would not require an act of Congress as the split of payments between employees and rent or utilities was not explicitly written into the CARES Act.

The SBA has continued to update guidance on the program and continued clarifications are expected in the coming weeks. A welcome relief to many small and medium businesses included a no-penalty to the forgivable portion of their loan for staff members refusing to return to work if an offer was made in good faith. Additionally, the required full-time employee threshold would be determined on June 30th instead of over the eight-week period determined when the loan was issued. This date could be pushed out again but would require legislation to do so.

Other considerations include:

  • extending the payback program from two years to five years.
  • Having the eight-week period to use the funds and bring back staffing levels to previous levels only to start once businesses can operate at full capacity

The main principle of the Paycheck Protection Program was intended to keep Americans on payrolls to maintain their jobs and benefits while social distancing and other measures were implemented to stop the spread of coronavirus further. However, with over 36 million unemployment claims the last two months, the PPP program could use additional changes to help businesses and their staff stave off financial hardships. A petition with 43,133 signatures can be signed here.