The federal government’s Paycheck Protection Program (PPP) just wasn’t enough for many small businesses, according to a recent survey by lending marketplace Fundera.
Of the 526 small businesses Fundera surveyed during most of June and July, 55% responded that their PPP funds didn’t stretch far enough to cover expenses and other needs. In a different question, over 80% of business owners told Fundera that they’ll apply for another financial relief program should one become available.
“The PPP has been an important lifeline for many small business owners and their employees,” wrote Fundera’s partnership editor Eric Goldschein. “That being said, with the pandemic far from over — and in many places, still not reaching its peak — itâs imperative that the government listen to the needs of businesses that are struggling, even now, to survive.”
The PPP was introduced on April 3rd as part of the federal government’s CARES package. Since then, it has handed out $520 billion of its $659 billion war chest in an effort to keep America’s small businesses on life support during the coronavirus pandemic. But besides its failure to adequately cover all the financial needs on Main Street, the program has received ample criticism for giving money to large chains and failing to adequately serve minority-led businesses.
Unless the government proposes its second 11th-hour extension, the first rendition of the PPP officially comes to a close this Saturday, August 8.
Fundera’s survey also exposed the convoluted nature of the PPP’s forgiveness process — over 40% of respondents said they don’t fully understand how to seek forgiveness on their loans. Despite this confusion, however, business owners are keen to receive forgiveness on their PPP loans — more than 96% said they’d request full forgiveness.
With such a confusing process, tools like the one recently introduced by AICPA and Biz2Credit aim to make the forgiveness process easier. The idea of universal forgiveness for PPP loans under a certain amount (such as $150,000) has also been gaining popularity in recent weeks, which could ease the burden for already over-strapped small businesses.
Another Round Of Government Aid Looks Likely
Fortunately, lawmakers appear keen to help businesses out with another round of federal funding — although differing opinions are delaying the process.
Last week, Senate Republicans, led by Marco Rubio (R-Fla.), introduced their plan for a new round of business aid. This proposal includes allowing financially stricken businesses with fewer than 300 employees to dip into the PPP a second time as well as simplifying forgiveness for those with PPP loans below $150,000.
“Congress must take action to help industries and businesses, especially minority-owned small businesses and those in low-income communities, that have been hit hard by the COVID-19 pandemic,” Rubio said in a written statement.
However, critics feel that Rubio’s proposal doesn’t stretch far enough — notably, in its failure to support more mid-sized businesses.
“Weâre having a debate about the eligibility of businesses,” Sen. Michael Bennet (D-Colo.) told Politico. “Partly, that might be based on the jurisdiction of the Small Business Committee, which I respect and I appreciate. … There are a lot of businesses that arenât the smallest businesses that have gotten clobbered here, and they employ a ton of people.”
Bennet and Sen. Todd Young (R-Ind.) have previously introduced their own bi-partisan proposal, labeled the “RESTART Act.” This bill suggests offering government-backed loans for businesses with up to 5,000 employees. Loans would be at least partially forgivable and would cover up to six months of payroll, benefits, and fixed operating expenses. Unlike Rubio’s proposal — which requires eligible businesses to have seen at least a 50% revenue decline — the RESTART Act’s aid would be eligible for businesses that have posted just 25%-plus in revenue losses.
Earlier this week, a number of top executives from numerous companies — including Starbucks, Google, Microsoft, and Disney — signed a letter backing Bennet and Young’s proposal while pressing Congress to act urgently in providing “longer-term” support for small businesses.
Where Else To Look For Funding
With more federal funding on the horizon, most businesses will need to wait until Congress approves an additional round of government aid.
However, some businesses may still be eligible to receive loans through the EIDL program, an emergency fund set up by the Small Business Administration. Other businesses that haven’t already received PPP funding may still be able to apply for a PPP loan — however, note that the program is closing to applicants on August 8.
For more general financial relief, check out Merchant Maverick’s guide to alternative funding methods.
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