On Friday, April 24th, Small Business Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin put out a joint statement on resuming the Paycheck Protection Program (PPP).
In their statement, they advise the Small Business Administration (SBA) will resume accepting PPP loan applications on Monday, April 27 at 10:30 AM EDT from approved lenders on behalf of any eligible borrower. This will ensure that SBA has properly coded the system to account for changes made by the legislation.
Early last week, PPP exhausted nearly $350 billion set aside under the CARES Act for low-interest loans to small businesses. On Tuesday, the Senate passed a measure to provide an additional $300 billion into PPP, bringing the overall total of funding for Coronavirus relief to small businesses to $650 billion.
According to the U.S Department of Treasury website, the CARES Act provides fast and direct economic assistance for American workers and families, small businesses, and preserves jobs for American industries; however, the PPP initiative has been plagued with difficulties from the start on providing small business the support they need to combat the effects Covid-19 has had on our economy and their businesses.
Aside from quickly running out of funds, which left many small businesses scrambling to find additional resources, the PPP has had technical delays & damaging PPP guidelines enabling larger companies to cut into the aide geared to helping small businesses.
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Two large corporations benefiting from PPP were Ruth’s Chris Steak House & Shake Shack; however, both have agreed to return the millions of dollars in loans they received due to loopholes in the PPP guidelines. After protests from small business advocates, Shack Shack, who reported on their 2019 total revenue increased 21.9% to $151.4 million, agreed to return the $10 Million they received. Ruth’s Steakhouse, who owns an estimated 150 locations and is valued at $250 million, also agreed to return the $20 million they received.
With so many businesses impacted by the Coronavirus, every resource possible is needed to save millions of small companies from bankruptcy. According to Forbes, 70% of small business owners have applied for an emergency loan under the CARES Act’s Paycheck Protection Program (PPP).
New measures have recently been added to the Paycheck Protection Program, including new guidelines on how accessible funds are to larger corporations. The new guidelines are geared to make it more difficult for large and public companies, like Ruth’s Chris Steak House and Shake Shack, to get approved for small business loans. The PPP guidelines state ‘… it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.’
Visit the Departed of Treasury for more details on the guidelines and how to apply.