Paycheck Protection Programs Ends – What Next?

The Paycheck Protection Program under the CARES Act ended June 30, 2020, and with over $520 billion loaned to nearly 4.9 million self-employed individuals and businesses.  The PPP was hastily passed by Congress and inconsistently-interpreted by government agencies.  Over $125 billion remained available under the PPP, but because of the often complex and uncertain conditions for receiving loans under the program no one was interested in receiving these remaining funds - even where they could have been forgiven.

With the US economy still struggling, Congress has now rushed to pass an extension of the PPP.  If signed by the President, the PPP will remain open and the deadline to apply will be extended from June 30th to August 8th now.

Congress is still debating a new stimulus law which may provide further funds to US businesses, on top of the $2 trillion already provided under the CARES Act.   Partisan wrangling has delayed passage, however, despite the continued need of US businesses for help.  US businesses are already closing their doors, and filing bankruptcy, and many more are expected to shut down.

Extension of the PPP is unlikely to encourage businesses to apply for any of the remaining $125 billion, given the problems and uncertainties with the program.

For those self-employed individuals and businesses that did obtain PPP loans, many are now seeking forgiveness of these loans.  The lending banks and the Small Business Administration are carefully reviewing applications for forgiveness, and the audits and investigations have begun.  It is expected the government will now want a significant amount of these PPP funds returned from borrowers, either because the government believes the borrower may not have qualified for a PPP loan in the first instance, or because the government does not believe the borrower’s PPP loan should be forgiven.  These expected government efforts will shut down even more businesses, who simply can’t afford to pay these funds back now.

The legacy of the PPP will last for many years to come, and with well-deserving self-employed individuals and businesses fighting now with the government to keep these funds.

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