As Congress weighs easing PPP rules, small businesses like what they hear
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The House is set to vote this week on a bill that would ease many of the Paycheck Protection Program’s rules. Businesses would get more time to spend the money and have the loans forgiven. They’d also be allowed more flexibility in how they spend the money. We checked in with some small-business owners to find out what they think.
Currently, if businesses want their PPP loans forgiven, they have to spend the money in eight weeks.
Tiffany Turner, co-founder of Adrift Hospitality, which runs five hotels in Washington state, said there’s a problem with that.
“The recovery’s going to take a lot longer than eight weeks,” Turner said. “In fact, most of us are still going to be in a crisis when that eight weeks is up.”
Turner said she’s worried she’ll have to lay people off after eight weeks, given how hard the pandemic has hit her industry.
The House bill would give businesses 16 additional weeks to spend their PPP money. Turner said that would go a long way toward getting her loan forgiven, something she was counting on when she took it.
“There’s so much uncertainty about the next 12 to 18 months that taking on any additional debt is just bad business at this point,” she said.
The proposal would also do away with the requirement that businesses spend 75% of their PPP loans on payroll. That would free up money for inventory, rent and other loan payments. Vermont restaurant owner Mark Frier said he needs more flexibility, especially if he gets more time to spend the loan.
“As you extend out the time, we’re going to continue to have those fixed costs of rent and utilities,” Frier said.
If a loan isn’t forgiven, the House bill would extend the time businesses have to pay it off from two years to five. Frier said that would bring down his monthly payments, but they’d still be pretty steep.
“Mine would drop from $25,000 to $10,000 a month, but that still represents basically my profitability for years.”
If businesses want their loans fully forgiven, they still have to bring back their employee headcounts.
Matt Hetrick runs the accounting firm Harmony Group. He said the extensions would give businesses more time to figure out how to do that.
“You’ll be able to plan, and if you’re not able to get your full forgiveness, you can plan for that,” Hetrick said. He added that these changes would reduce the confusion that’s surrounded the program from day one.
And they would help companies accomplish the goal of the PPP loans: to keep employees working.
COVID-19 Economy FAQs
With a slow vaccine rollout so far, how has the government changed its approach?
On Tuesday, Jan. 12, Health and Human Services Secretary Alex Azar announced changes to how the federal government is distributing vaccine doses. The CDC has expanded coronavirus vaccine eligibility to everyone 65 and older, along with people with conditions that might raise their risks of complications from COVID-19. The new approach also looks to reward those states that are the most efficient by giving them more doses, but critics say that won’t address underlying problems some states are having with vaccine rollout.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
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