President Donald Trump signed a bill Friday afternoon that revamps many aspects of the Paycheck Protection Program—the nearly half a trillion-dollar federal pot of money meant to offer a lifeline to struggling businesses that have taken massive hits amid the COVID-19 pandemic and recession.
Trump approved the bill less than a day after it received a unanimous vote by the U.S. Senate in June. The U.S House of Representatives approved it in a 471-1 vote on May 28.
The expansion – outlined in House Resolution 7010 – scales back how much businesses have to spend on payroll in order for loans to be forgiven from 75 percent to 60 percent. Businesses are also given more time to spend the money – six months instead of the current two months – to take pressure off employers.
That grants more time to restore the number of workers and wages to pre-pandemic levels.
The program was created via the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, a landmark $2.2 trillion federal stimulus bill that President Donald Trump signed on March 27. It calls for forgivable loans of up to $10 million for companies to keep their employees on the payroll, as government-mandated shutdowns of businesses halt commerce and dry up revenue.
Mass furloughs and layoffs have led to a record-shattering 15.3 percent unemployment rate in New Jersey, and as of Friday a 13.3 percent national unemployment rate.
The U.S. Small Business Administration oversees the PPP program, which comprised a first round of $349 billion in funding in April and a second round of $310 billion later that month.
Without the extension, businesses would have to begin repaying their loans next week.
New borrowers have five years to repay the loans, instead of two. And they can delay their payroll taxes, something barred under the current version of the CARES Act.
“The majority of small businesses are still negatively impacted by the economic crisis,” said Holly Wade, director of research and policy analyses at the National Federation of Independent Businesses, in a June 2 statement. “Adding flexibility to the PPP loan forgiveness is one thing our elected officials can do to ease the burden on small businesses nationwide.”
But the program has been marred by complaints of mismanagement and difficulty with many businesses obtaining loans.
Despite $17 billion having been awarded to businesses in New Jersey, a June 4 Focus NJ report found that 86 percent of New Jersey companies hadn’t received any money under the federal aid program.
“A large number of small businesses in the Garden State have not received assistance through the PPP and they continue to weather the economic downturn with limited federal assistance,” said Nicole Sandelier, executive director of Focus NJ, the research arm of the New Jersey Business & Industry Association.
The PPP has fallen under scrutiny from government officials, media outlets and watchdog groups over whether the federal aid money went to well-financed companies that did not need it, rather than struggling Main Street, mom-and-pop shops.
In May, U.S Treasury Secretary Steven Mnuchin warned that businesses who received a loan over $2 million will be audited by the federal government to verify that they actually need the money before the loan can be forgiven.
“[A]anyone that took the money that shouldn’t have taken the money, one it won’t be forgiven, and two, they may be subject to criminal liability, which is a big deal,” Mnuchin said in an interview with Fox News.
Twenty-five publicly traded New Jersey companies returned a combined $21 million of PPP money—the largest was the $10 million loan to IDT Corp., according to public filings from the Securities and Exchange Commission and compiled by Washington, D.C.-based analytics firm FactsSquared.