What’s the Issue?
In March 2020, Congress passed a $2 trillion relief package, the Coronavirus Aid, Relief, and Economic Security Act. The CARES Act provided $349 billion in loans to small businesses through the Small Business Administration’s Paycheck Protection Program. The goal of the program was to help the country’s 30 million small businesses pay their employees and continue to serve their communities throughout the coronavirus pandemic. The original funds were quickly exhausted, and one month later Congress authorized an additional $320 billion in funding through the Paycheck Protection Program and Health Care Enhancement Act. PPP loans are forgivable if small businesses use the money according to the PPP loan requirements. The program expired in August 2020 and there has been no additional funding until now.
On December 27, 2020 a second stimulus package was signed into law reauthorizing the PPP. The relief bill allocates $285 billion in funding and businesses that received a loan of less than $150,000 can receive simplified and streamlined forgiveness by submitting a one-page attestation form.
First-time PPP borrowers can borrow up to $10 million or 2.5 times their average monthly payroll while second time borrowers are eligible to receive up to $2 million if they have no more than 300 employees and suffered at least a 25% drop in revenue, and meet other eligibility criteria.
How Does This Affect Me?
Protecting small businesses from widespread permanent closure is critical. Small businesses are the backbone of our communities; they create unique entrepreneurial opportunities and provide much-needed services in our communities. Unfortunately, they are at great risk of permanently closing their doors during the pandemic if Congress does not continue to provide necessary relief.