June 30, 2020
COLUMBIA, S.C. (WIS) – On Tuesday night the Small Business Administration’s Paycheck Protection Program, nicknamed the PPP program, will end. The program has approved nearly 5 million loans since it began in early April to help small businesses weather the financial strain of the COVID-19 pandemic.
As of today, there is still 130 billion that remains in the program and has gone unused. Fred Greene, the President of the South Carolina Bankers Association, said many businesses have been reaching out to bankers over the past few days, trying to get a loan before the program runs out.
“Just yesterday I talked to one of our bankers and he has been flooded over the last two days,” Greene said.
Other businesses struggle as the loan they received at the beginning of the PPP program is about to run out.
“The PPP money helped us out a lot but that’s almost all gone now,” Tim Smith, the owner of the Papa Jazz Record Shoppe said.
Other criticisms have centered around which businesses received loans. A few business owners said they feel like the PPP program favored big businesses over small businesses.
The President of the SC Small Business Chamber of Commerce, Frank Knapp, said that 85 percent of loans were for less than $150,000, but those loans only account for one-fourth of all the PPP money given out, which he says means that most of the loans were big loans going to big business.
“We need to take the $130 billion still left as of today and now will not be claimed under the PPP loans and we need to turn that into grants and focus that on those small businesses with less than 20 employees who did not get a loan,” Knapp said.
Another challenge businesses faced were the strict guidelines to have the loan forgiven. In order for the loan to be forgiven in the original guidelines, a business had to use 75% of the loan towards payroll and bring back all the employees by June 30th for the loan to be forgiven. The business also had to use the loan within 8 weeks of receiving it.
Earlier this month, President Trump signed the Paycheck Protection Flexibility Act that extends the time period to use the funds from 8 weeks to 24 weeks and eased hiring restrictions so that only 60% of the loan had to go to payroll, allowing for the loan to help cover other expenses.
“Unfortunately the way it was rolled out and the rules that were written were not the best and its caused a lot of confusion,” Knapp said. “There has been some changes to make them forgivable, but the problem is a lot of these loans are 8-week loans and that money has already been gone so extending the deadline for 24 weeks for 8 weeks doesn’t help small businesses who got the loan. They already expended the dollars.”
Smith is one of those business owners. He said that the new bill doesn’t help him because he has already spent the majority of the loan under the original guidelines and the money is about to run out.
“What most of us need is more money- not more time to spend it,” Smith said.
Kristian Niemi, the Owner of the Black Rooster and Bourbon, said that the Paycheck Protection Flexibility Act helped him. He said that he’s decided not to reopen either restaurant until the number of cases goes down and the new guidelines allow him to wait to use the loan for when he reopens in a few months.
Greene said that lawmakers are currently discussing using the $130 billion dollars to create another round of small business loans, but he says that if a small business needs another loan now, traditional bank loans or SBA loans are available. He also said that Greene the SBA hasn’t opened the portal for businesses to begin requesting loan forgiveness for the PPP loan, but he said that should be coming in the next few weeks.