With Less Than A Week Until PPP Deadline, Small Business Majority Releases Recommendations to Improve and Extend the Program
Washington, DC – With less than a week until the deadline for small businesses impacted by COVID-19 to apply for the Paycheck Protection Program (PPP) and apply for loan forgiveness, Small Business Majority called on Congress to extend the application deadline from June 30, 2020 to December 31, 2020. Additionally, Small Business Majority recommends that Congress amend the program to allow borrowers to apply for a second round of PPP, prioritize women and minority-owned businesses with the remaining funds, eliminate the payroll requirement tied to forgiveness, and automatically forgive all loans under $150,000, among other items.
“While PPP has been law since the beginning of April, many of the smallest, most vulnerable businesses were shut out of the first round of funding and have since struggled to find lenders or determine if the program is workable for their business. It was not until three weeks ago that some of the program’s shortcomings were addressed. Now, thousands of small business owners are reevaluating if PPP is the right fit for them,” said John Arensmeyer, Founder and CEO at Small Business Majority. “There has been recognition from the Administration and Congress that additional assistance is needed for small businesses to recover. However, progress has stalled with the Administration planning to wait 30 plus days before developing the next phase of recovery. In the interim, it is up to Congress to ensure that over $100 billion in critical relief funds do not lapse because of a closing application window. By extending the program through the end of the year and prioritizing distributing remaining funds to the smallest businesses, with a special emphasis on those owned by women and people of color, Congress will help ensure that the largest relief program in our nation’s history is working as intended. America’s small business community will need much more assistance in the weeks, months and years ahead, but there are changes that could be made to the program immediately to propel Main Street recovery in the right direction and save jobs and businesses alike.”
A comprehensive list of reforms Small Business Majority recommends for PPP include:
- Extending the application deadline through December 31, 2020, with the Small Business Administrator able to extend the deadline at any point without additional authorization from Congress;
- Ensuring that the smallest businesses in the most need are able to apply for a second round of PPP funding, should their business need it;
- Prioritizing small business owners of color, women, and those businesses in rural areas when distributing the remaining PPP funds, as proposed in the Prioritized Paycheck Protection Program Act, by reserving the lesser of $25 billion or 20% of PPP funds for employers with 10 or fewer employees, as well as small businesses in underserved and rural communities;
- Automatically forgiving all loans under $150,000, which represents 86% of the program’s smallest borrowers, but only approximately 25% of all funds distributed through PPP;
- Incentivizing lenders to process and make small-dollar loans, by providing lenders with a minimum processing fee of $2,500 per loan;
- Eliminating the current requirement that at least 60% of the loan funds are used for payroll costs in order to be forgiven, allowing small businesses to have additional resources left over for operational expenses; and
- Extending the repayment period from two years to five years for existing borrowers.
About Small Business Majority
Small Business Majority was founded and is run by small business owners to ensure America’s entrepreneurs are a key part of a thriving and inclusive economy. We actively engage our network of more than 65,000 small business owners in support of public policy solutions and deliver information and resources to entrepreneurs that promote small business growth. Our extensive scientific polling, focus groups and economic research help us educate and inform policymakers, the media and other stakeholders about key issues impacting small businesses and freelancers. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.