The Paycheck Protection Program has life until August 8.
Late on Saturday, July 4, President Donald Trump signed an extension of the Paycheck Protection Program (PPP) into law, according to the White House. The signing comes after both the Senate and then the House passed an extension of PPP via unanimous consent votes.
When the program’s authorization ended on June 30, the PPP had disbursed $520.6 billion to about 4.85 million recipients. The average size of the loan through June 30 was $107,199. The number of lenders who participated in the program was 5,459.
In the first report of the amount that was loaned, released April 16, the average size of the loan was $206,000, showing how smaller borrowers increasingly made up the base of borrowers as the program progressed.
But the $520.6 billion didn’t account for the entire authorized amount of roughly $659 billion, though the first tranche of money, $349 billion, was exhausted after about two weeks in early April. Congress then passed the additional funding to take up authorization to $659 billion, but that additional amount was not disbursed.
That means the extension will make available another roughly $140 billion for borrowers. There is no new funding in the extension, just a continuation of what hasn’t been claimed.
Todd Amen, the president and CEO of ATBS, which has helped many truckers through the PPP process, said it was likely that the process for obtaining the loans may have kept some truckers from applying. The rules changed frequently, enough that the Small Business Administration, which administers PPP, kept putting out clarifications and updates almost weekly.
“They kept hearing the money was going to run out, so why bother?” Amen said in an email to FreightWaves. “They are procrastinators. They didn’t have their paperwork together and couldn’t get their accountants to do their 2019 tax return because they were closed or too busy.” Tax returns from 2019 are necessary to meet some of the requirements of PPP.
There has been a school of thought that the PPP kept alive some trucking companies that might otherwise have gone out of business. When the money runs out – and PPP money can now be used to cover certain expenses for up to 24 weeks, up from an original eight weeks – the view of those espousing that theory assumed a lot of them would go out of business and tighten trucking capacity.
Amen agreed with only part of that. The PPP funds did help keep some companies alive, he said in his email, “but now they are working hard to make it in the new normal business environment,” he said. “So I don’t expect a bunch of PPP zombies to disappear in the next 90 days. Banks will work with folks on payments or extensions, because they don’t want assets back in this environment.”
The next big shoe to drop in the PPP “watch” is the list of companies that have received the loans. Treasury Secretary Steve Mnuchin announced more than two weeks ago that the identity of borrowers that received loans of more than $150,000 would be disclosed. No date for that information to be released has been announced.
The majority of the money loaned under PPP is in loans that exceeded $150,000. The loans that are less than $150,000 accounted for approximately 86% of the total outright number of loans, but only a little more than a quarter of the money loaned.
PPP loans are eligible for full forgiveness if several criteria are met, most notably that 60% of funds needed to be used to keep employees on the payroll. That figure had been reduced from 75%, allowing more of its funds to be directed toward other expenses.