Covid-19 Relief: What, When and How PPP2 Aid May Still Come for Small Businesses

As of May 28, 2021, the Paycheck Protection Program has run out of funding. You can learn more about the PPP with our COVID-19 resource hub.

The what, when, how and IF of the next round of coronavirus aid for small businesses.

The one certain thing small business owners are dealing with during the coronavirus pandemic is uncertainty.

Here’s the latest on:

• What types of coronavirus economic relief may be passed into law.
• When it could become available.
• How it may be delivered.

And most importantly, IF it’s going to happen.

The impact of the COVID-19 crisis on small businesses.

Small businesses were severely impacted when COVID-19 arrived in the United States more than six months ago. After experiencing more than a decade of a relatively stable business environment, they were suddenly dealing with state and local government stay-at-home orders because of the COVID-19 outbreak along with significant limits on how they could conduct business. This lead to major cash flow issues, a lack of working capital and the inability to meet payroll costs. Many businesses were forced to layoff or furlough valued full time employees.

Small businesses in many industries, especially hotels, restaurants, healthcare, retail and childcare were particularly hard hit. Early in the COVID-19 pandemic, businesses in some parts of the country, including New York, New Jersey, California and Illinois were heavily affected by the pandemic. Over time, there have been few parts of the United States left untouched by COVID-19. All types of small businesses across America have been significantly — and unexpectedly — impacted by the coronavirus crisis.

Even today, after many health-related limits on conducting business have been lifted, most organizations are struggling. Small businesses are still closing in record numbers and few have returned to pre-pandemic sales and revenue levels.

Economic support for small businesses.

The federal government, states and some local governments, along with private foundation grant programs, have stepped in on numerous occasions during the pandemic to provide aid to small businesses, most notably when Congress passed the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act back in March. 

However many of the funding sources, assistance programs, emergency grants, relief funds and low-interest loan programs have dried up. This is a big concern for many business owners, especially with winter approaching and people moving indoors. These factors could cause the spread of coronavirus to increase, possibly forcing more limits on conducting business, which could lead to additional small business closures.

Add to all this another layer of uncertainty: It’s currently unclear when a viable coronavirus vaccine or therapies could be ready, approved and distributed broadly. This is making it unclear when the pandemic might end and small businesses could start operating in a more dependable new normal.

Because of this lack of clarity, the best hope for most small businesses is further government COVID-19 relief aid. However, at this point, what form it will take and when it could happen is — you guessed it — uncertain. It could include anything from tax relief to low interest rate loans to extensions of relief programs that have been put on hold.

Current Congressional economic security negotiations.

Record levels of partisan rancor have been ratcheted up because of her passing and disputes about when and how to replace her. This has made it more challenging for Congressional Republicans and Democrats to focus on — and come to agreement on — a coronavirus economic stimulus bill. This could include doing simple things like:

• Restarting the Paycheck Protection Program (PPP), a small business loan initiative, that provided loan forgiveness, that was part of the CARES Act. The PPP loan program expired and the application process ended on August 8, even though $133 billion in funding is still available from previous Congressional appropriations for the program. 

An extension of the PPP loan initiative has been a part of some House and Senate COVID-19 relief proposals over the last few months, but none have moved ahead and been passed into law. One of the issues with the PPP that’s preventing it from being renewed is that there were provisions in the original law and subsequent updates that made it unpopular with some small business owners because it was too difficult for them to qualify for loans.

In addition, it underserved businesses owned by minorities, micro businesses, self-employed people, independent contractors, nonprofit organizations and operations in under-banked communities. Members of Congress are unable to come to agreement on how to fix the PPP. Some recommendations include strengthening and providing more resources to Community Development Financial Institutions (CDFIs), mission-driven lenders, Minority Depository Institutions and federal Minority Business Development Centers. There was a requirement for the United States Small Business Administration (SBA) and the U.S. Treasury to do this in the original CARES Act, but it was never implemented. 

• Funding the Economic Injury Disaster Loans (EIDL) program, which provides disaster assistance to small businesses in crisis situations. A benefit of the program that appeals to many small business owners is that it’s run directly through the U.S. Small Business Administration. They don’t have to apply for it through commercial banks, which many small business owners don’t have relationships with. 

This is a permanent program, but Congress needs to make loan funds available to replenish it. (This includes funding for SBA Express Bridge Loans, which are part of the EIDL program that provide fast cash disbursements for businesses in crisis situations.) It’s the only way for the SBA to be able to restart the loan application process and make loans to businesses that need them.

There are also complications when it comes to restarting the EIDL program. Many members of Congress want to make the loans forgivable through a forgiveness application similar to one that’s part of the PPP loan program during the pandemic, but there isn’t broad agreement on this.

Are you interested in tracking the future of the PPP and EIDL initiatives or other SBA debt relief programs? The Small Business Administration provides updates on it‘s loan programs, including webinars and answers to Frequently Asked Questions (FAQs) on the SBA.gov website.

The future of coronavirus financial assistance for small businesses.

Despite these challenges, talks between Democrats and Republicans are slowly moving ahead on a new economic relief package that will likely include benefits for small business owners. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are communicating daily about a new bill. 

House Democrats recently rolled out a $2.2 trillion bill, which is approximately $1 trillion less than the Health and Economic Recovery Omnibus Emergency Solutions (HEROS) Act they proposed back in May. The new bill would reinstate enhanced unemployment benefits, provide direct payments to eligible Americans through the Internal Revenue Service (IRS), restart the Paycheck Protection Program and provide additional resources to struggling airlines. Experts believe negotiations on this proposal could be complete — and it might be ready for a vote — by October 2, the last day both houses of Congress are scheduled to be in session. If this happened, the Senate would likely vote on the bill on October 2, The House on October 3 (the day after they’re supposed to head home) and President Trump would sign the bill into law on October 4.

Here are other scenarios that are possible:

• Congress could focus on smaller, stand alone bills rather than attempt to pass a bigger legislative package. This seems unlikely because the Senate tried to do it recently with the Delivering Immediate Relief to America’s Families, Schools and Small Businesses Act, but that proposal failed. The House has also tried it, but it hasn’t been successful, either.
• The president could take additional executive action. After talks about a stimulus package failed in early August, President Trump signed one executive order and three memoranda related to slowing evictions because of coronavirus job losses, extending enhanced unemployment benefits and deferring payroll taxes until next year. It’s possible that there could be more executive actions if negotiations fail before the election.
• Negotiators could extend talks about economic stimulus until after the election. Because of how politically charged the atmosphere is now, Congressional leaders may prefer to wait to pass anything during the period between now and the presidential inauguration on January 20, 2021. This is because negotiations could change significantly based on the results of the election.
• Lawmakers could take no action. This seems unlikely, but it’s not impossible. With unemployment at extremely high levels, thousands of small businesses failing and a possible housing crisis in the works, Congress, which is already unpopular, could become even more so if they don’t help American citizens get through this new phase of the COVID-19 crisis. 

If Congress takes no action on a relief package or individual bills or if  President Trump doesn’t issue additional executive orders, it could potentially cause the economy to plunge into a deeper recession and economic crisis.

While it’s still unclear how the economic fallout from COVID-19 will be resolved, Biz2Credit is committed to sharing the latest information about economic support for small businesses. Stay tuned to stay up to date.