Treasury Secretary Hints At Paycheck Protection Program’s Future
Negotiations on further federal relief as the U.S. grapples with the COVID-19 crisis is ongoing in Washington, D.C. While it is unclear what form it will ultimately take, recent comments from Treasury Secretary Steven Mnuchin hint at positive updates and changes that could be in store for the Paycheck Protection Program (PPP).
Created by Congress as one of the key provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed in March, the loan program has provided emergency funding to more than four million small businesses, enabling them to keep employees on their payrolls and manage expenses.
Speaking to the House Small Business Committee on Friday, Sec. Mnuchin suggested that amendments to the PPP would allow some companies struggling through the pandemic to apply for a second loan. The potential second loan would be available to businesses that have experienced particularly large declines in revenue, and could also be used on a broader range of business expenses.
Speaking to the committee, Sec. Mnuchin said, “Next phase relief should extend the PPP, but on a more targeted basis for smaller companies and those that are especially hard hit, such as restaurants, hotels and other travel and hospitality businesses.” He noted that the eligibility would be open to businesses with “significant revenue declines” rather than specific industries.
Other areas Sec. Mnuchin voiced support for was a bipartisan bill that would allow businesses that saw revenue declines of at least 25 percent to apply for six months’ worth of fixed operating costs and payroll, and a push to set aside funds for minority businesses.
During his meeting with the committee, the secretary also gave his support to lightening the paperwork load on smaller borrowers and potentially forgiving all small loans. House Small Business Chairwoman Nydia M. Velázquez of New York said, “One of the top issues we heard from PPP stakeholders is the incomplete and ever-changing guidance. Borrowers testified that they have very little guidance regarding how to spend their loans. So, they could qualify for full forgiveness, and lenders are still reporting the process for seeking forgiveness is unclear and unworkable. If forgiveness is the centerpiece of the program, a streamlined, efficient process for getting those loans forgiven should be a priority.”