PPP Forgiveness and Future Stimulus for Small Business

The SBA and the Treasury Department, have released a simplified loan forgiveness application for Paycheck Protection Program (PPP) loans of $50,000 or less. This action will help streamline the PPP forgiveness process to help ease the burden on PPP lenders and provide administrative relief to the smallest businesses.

“The PPP has provided 5.2 million loans worth $525 billion to American small businesses, providing critical economic relief and supporting more than 51 million jobs,” said Treasury Secretary Steve Mnuchin. “We are committed to making the PPP forgiveness process as simple as possible while also protecting against fraud and misuse of funds. We continue to favor additional legislation to further simplify the forgiveness process.”

SBA began accepting PPP forgiveness applications in August and started remitting forgiveness payments to PPP lenders on October 2, 2020. SBA will continue to process all PPP forgiveness applications in an expeditious manner. Many lenders have been waiting for an action like this to begin accepting applications from their millions of small business borrowers. Now, I expect that many more lenders will jump on board, which is good news for small business owners who have been in limbo since the PPP closed on August 8th.

At Biz2Credit we've been supporting business owners with the forgiveness process by providing online tools and resources. Visit PPPforgivenesstool.com to complete a guided loan forgiveness application for free.

Meanwhile, small companies that are desperately in need of capital remain in a state of limbo. While the Democratic-controlled Congress seemed willing to pass a “PPP 2” measure to provide more money to struggling small business owners, negotiations have stalled in the Senate, and President Trump tweeted on Tuesday that he would halt negotiations on a new stimulus package. The tweet sent stock markets into a nosedive, and the next day he changed his tune. Now, Speaker Pelosi and Secretary Mnuchin are once again negotiating a new stimulus package that could bring relief to many business owners. If reports are correct, the bill would include an opportunity for hard-hit businesses to take a second PPP loan - what has been referred to as PPP 2.

We are less than a month from Election Day, but now is not the time to play politics with the future of America's small businesses. The Republicans, typically more fiscally conservative than the Democrats, are concerned about approving billions more in government spending – especially if unrelated add-ons are attached to a bill. In order to get the job done and help save small businesses, leaders in Washington should agree to a package that prioritizes stimulus items, not “pet projects.”

Now is the time for PPP 2. Recent research that my colleagues at Biz2Credit have conducted shows that millions of business owners are still in the red, unable to make enough money to cover the increased costs they face from new government mandates around social distancing and personal protective equipment (PPE). Even though many small businesses need money fast, they are playing a wait-and-see game with regards to PPP. Few of them will be able to apply for more PPP funding, unless they are certain that the initial round of PPP loans are truly forgiven, as promised.

Even those who want to try to apply for non-PPP funding are encountering difficulty securing capital right now. Small business loan approval percentages at big banks ($10 billion+ in assets) dropped to 13.5% in September. That reverses the trend of increasing loan approval rates that had started to emerge over the summer. It's indicative of the struggles that small businesses are facing, according to the latest Biz2Credit Small Business Lending Index? released this week.

Just like at the start of the pandemic, swift action from both the public and private sectors is more important than ever. New measures to support small businesses should be at the forefront of policymakers' agendas. The weeks ahead running up to Election Day will be critical in the fight to keep American small business owners on their feet.

For an update on what’s happening with small business relief legislation, business owners can join Biz2Credit’s upcoming Online Forum: Small Business and the COVID-19 Pandemic – A Discussion with Rep. Adriano Espaillat (D-NY) and Rep. Kevin Hern (R-OK) on Thursday, Oct. 15, 2020, from 2:00 to 3:00 p.m. (EDT). Both Congressmen are members of the House Small Business Committee. To register for this online forum and submit a question, visit the Biz2Credit Webcast Center.