Billions of Dollars Are Left in the Paycheck Protection Program—What Happens Now?

The deadline for the loan program has been extended as many restaurants are still struggling to make ends meet.

NYC Coronavirus Closed Sign
Photo: Carminooch13/Getty Images

While individuals were waiting around for their $1,200 economic impact payments, for small businesses—including restaurants—the most talked about coronavirus relief was the Paycheck Protection Program or PPP. Part of the reason the $669 billion program was so discussed was because it also proved controversial. The PPP had multiple hiccups: Just to scratch the surface, the initial funds were quickly snatched up, in part by larger companies the relief wasn’t entirely intended for, with additional allegations that banks didn’t handle applications properly, and even then, qualifying for the loans was tricky.

Eventually, some of these wrinkles were ironed out, but plenty of businesses remained reluctant. Today is the final day for applications, and as of this weekend, the program still had over $100 billion in its reserves.

So, assuming most of those billions are still around tomorrow, what will happen to all that leftover money? According to Bloomberg, the simple answer is that it will go back to the Treasury—that is, unless the funds are repurposed. And with America’s reopening continuing to sputter, repurposing those funds might be a good idea.

“There’s strong bipartisan interest in protecting the funds that have been appropriated to develop a second round, but to have it targeted more to those small businesses that really need the help,” Senator Ben Cardin, who serves on the Small Business & Entrepreneurship Committee, told the business site.

Earlier this month, Cardin, along with other Democratic senators, introduced the Prioritized Paycheck Protection Program (P4) which would open up new funding and extend the PPP deadline until December 30. Meanwhile, The Washington Post reports that Cardin’s Republican counterpart, Senator Marco Rubio, is working on his own plan that would expand how the funds could be used by offering new spending opportunities. Specifically, the senator offered the example that funds could be given to restaurants to help build more outdoor seating or reconfigure floorplans.

“PPP has been widely successful. There are more companies that could benefit from it. It would be great if extending the deadline would help them. But my sense is the greater need right now is in companies that have received that assistance but now need new or different kinds of assistance,” Rubio was quoted as saying. “I’d say we’re close on a lot of the details, but like always the ones that are left open are probably the hardest ones to confront.”

The future of the PPP and its extra funds could also be decided as part of a larger, next wave of stimulus expected to be determined by Congress in July. The original PPP was, itself, part of the larger CARES Act.

Still, even if this money does get reallocated in a similar manner, that doesn’t necessarily mean it will find its way to the businesses who need it the next time around. “Why is there so much money left? The very simple answer is because we know there’s need, but it’s hard,” Tom Sullivan, vice president of small business policy for the U.S. Chamber of Commerce, told Bloomberg. “It’s really hard.”

Update July 2, 2020: As of July 1, Congress has passed an extension of the PPP application deadline to August 8. While not confirmed by the White House, the Trump administration's previous support for the program would seem to indicate the president will sign the bill.

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