US Treasury Secretary Mnuchin Open to Easing Limits on Small Businesses PPP Loans
May 12, 2020
Updated 5/14/2020 at 9:25am ET — The SBA announced yesterday that it would extend until May 18 the deadline for PPP borrowers who did have access to other sources of capital to return funds.
SC&H’s Key Takeaways
- There is still $120B+ remaining in the second round of the PPP funding.
- Secretary Mnuchin is open to making changes to the current forgiveness rules and making a technical fix to better support businesses that will struggle to reopen even under loosening social distancing rules.
- Companies have until May 18th to returns received PPP funds if they are concerned about their certified need standing up to scrutiny.
Since April 3, the Paycheck Protection Program (PPP) has allocated $649 billion to loan programs for small businesses, sole proprietors, and independent contractors. With a reported $120+ billion remaining in the program, U.S. Treasury Secretary Steven Mnuchin indicated on Monday, 5/11, that he’s willing to work with Congress on bipartisan fixes to the popular program.
His comments stem from growing concerns from lawmakers and business about the forgiveness terms of the loan—which are still awaiting further guidance from the SBA—and the desire to give recipients increased flexibility to hold on to their loans for longer and use more of the funding to cover overhead.
The PPP loan can be entirely forgiven if the business uses at least 75% of the money for eight weeks of payroll plus no more than 25 percent of certain overhead costs during that same period, according to rules issued by the SBA. Businesses receiving a PPP loan have until May 18th to returns funds if they are concerned about their certified need standing up to scrutiny.
Last Friday, May 8, the SBA inspector general warned the administration’s 25 percent cap on overhead costs eligible for forgiveness did not align with the law that created the PPP and could harm the businesses the program intends to help.
Mnuchin did not agree with the inspector general’s sentiment but added: “The way Congress designed this was eight weeks of payroll and 25 percent of overhead. If Congress wants to change that rule, I’m happy to work with Congress if there’s bipartisan support to do that.”
Mnuchin also expressed willingness to make a “technical fix” to aid businesses that may not be able to open soon even under loosening social distancing rules, including restaurants.
We’ll continue to keep an eye out for PPP updates and/or new guidance and will update this article once this information becomes available.
In the meantime, if you have any questions for the SC&H Group Team, please reach out to us directly through our website.