On the day that the Paycheck Protection Program (PPP) was set to expire with more than $130 billion in authorized funds waiting to find a borrower, the initiative to keep Americans on their companies’ payroll may be getting new life.
According to various news reports, the U.S. Senate, in a type of vote known as unanimous consent, approved keeping the doors to PPP open until August 8. To become law, the Senate vote needs to be ratified by the House of Representatives and signed by President Donald Trump.
The move was described by some Congressional reporters as a surprise. But Greg Feary and Steve Pletcher of the Scopelitis law firm, in an email responding to questions from FreightWaves, said the action was not surprising, “other than the Senate passing by unanimous consent as there was some initial comment that indicated opposition to an extension.”
The question is whether it will make any difference. The first tranche of PPP money, $349 billion, effectively sold out in just a few weeks. A second authorization pushed the amount of the funding under PPP to more than $655 billion, but as of late last week, the U.S. Small Business Administration (SBA) reported that about $134 billion remained available to be distributed.
While the PPP is complex, its primary components are that the loans are forgivable; 60% of the loan amount must be used to pay employees, a figure down from 75%; and companies have 24 weeks to spend the money, a big increase from the first rule that said the money must be spent over eight weeks.
Feary and Pletcher said in their email that despite the fact that there was a large amount of money unclaimed, interest from the trucking sector remained. “We have been getting calls with questions about eligibility and application issues right up to the initial June 30 deadline, so it appears that interest remains,” they said in their email. “Moreover, for many businesses, it is possible that the impact of the pandemic and shut-down orders may just now begin to manifest. In other words, in some business segments the full economic impact may have been delayed, particularly if the recovery is slowed by the recent outbreaks in various parts of the country.”
Todd Amen, President of ATBS, which has walked many companies through the PPP process, said something similar. “There will always be people that can benefit from the PPP money,” he said. “We put out a last call a couple of weeks ago and had a few hundred folks that were still interested in PPP loans and hadn’t done anything yet.”
What’s been given out so far
The breakdown of loans provided by SBA through June 26 showed that the transportation and warehousing sector defined by SBA had received roughly $16.9 billion under the PPP, about 3.26% of all disbursements. That percentage has held steady between about 3.15% and 3.25% throughout the life of the program.
The Treasury Department announced June 22 that it was going to disclose the names of many of the borrowers of PPP loans. However, recipients that received less than $150,000 would not be disclosed. As of the final interim report the SBA released yesterday, at what was assumed to be the close of the entire program, the average loan was $107,199.
The SBA has not yet provided a date on when the names of the borrowers will be disclosed. Based on the weekly SBA report from June 27, about 655,880 borrowers would fit the requirements to have their names disclosed, while about 4.15 million would not.
The PPP was put together rapidly in the first days of the pandemic. That means the SBA has been providing clarifications and updates to its rules once a week or once every other week. One of the key issues has been the relationship between whether a loan is eligible for forgiveness and the ever-changing status of employees – laid off, laid off but called back, called back but didn’t show, and so on. “Potential expansion of relief from penalty for reducing workforce and wages may help as well,” Feary and Pletcher wrote in their email. “Some borrowers may feel that uncertainty with the economy makes it difficult to predict whether there may yet be the need for workforce reductions or salary and wage reductions that can impact the ability to have the loan completely forgiven.”
A bill has been introduced by three Senate Democrats to modify the PPP and allow it to give money out a second time to companies that exhausted their first round of funding. However, those provisions do not appear to be in the legislation passed by the Senate on Wednesday, July 1.
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