Kudos to the U.S. Senate for taking needed action the past week to provide greater flexibility to the Paycheck Protection Program (PPP), the small business rescue loan program Congress passed as part of the CARES Act in March.
The bill passed the House last week on a 417-1 vote. It now goes to the president who is expected to sign it.
Many small businesses in this area are cheering efforts to improve PPP, which has provided a lifeline to small businesses and the self-employed hit hard by the COVID-19 crisis.
The program’s goal is to help small businesses keep their employees paid through the coronavirus crisis with loans that can be forgiven if certain conditions are met, including if they spend 75 percent of the loan funds on payroll costs within eight weeks. The Congress has provided more flexibility to the original plan by lowering the percentage spent on payroll from 75 percent to 60 percent and extending the original eight weeks to 24 weeks to be eligible for at least some loan forgiveness.
Congress also has made the PPP more borrower-friendly by changing the repayment date from two years to five years after the borrower receives the loan.
Business owners appreciate the fact that it will allow the PPP to do what it was intended to do, which is to keep more of their employees working during the pandemic.
Congress deserves credit for taking action to improve on a well-intentioned bailout program whose quick rollout wasn’t that smooth.
We don’t doubt that this program will keep some companies afloat and enable them to retain employees. Companies have suffered a sharp drop in revenue due to the pandemic. These are challenging times.