In April the money used to help businesses dried up in less than three weeks and another call for more money was approved by Congress and the president. Since then people are very reluctant to take the money and even some small business owners are giving back the money, why?
Some of the reasons range from the confusing rules on how to use it, the loan forgiveness being very hard to understand, and being so restrictive. Congress worked with the Treasury Secretary, Steve Mnuchin, to make the rules less restrictive which caused another surge in applications. The people following these issues are being smart now because if they get closed again, they have to be prepared to handle another wave and not lose their business.
Because of how the program had to be established so quickly a lot of misinformation and rules really had an effect on business owners on what to do, who to hire back, and how much of the employees could be paid. When other employees came back how do you report back to the state and if they did not what reasons did you have to give the state and program so you would not be penalized and have to owe money.
Because of the new flexibility in the program we see more small businesses taking advantage of the money now to help their business. The bottom line small businesses are the engine of the economy employing more than 50% of the people in the United States and these businesses cannot fail and need help opening back up to be useful to the local economy to thrive for people to help their families and local communities to thrive in the total economy.
Some of the rules that were negative were having to use the money within eight weeks and now with the new change, you have 24 weeks to allocate how you spend the money you receive from the PPP program.
The whole idea of the Payment Protection Program was to keep people off of unemployment but many workers applied for unemployment and received more money from unemployment benefits than they would have if they worked which put the small business owners in a very bad position.
A lot of the banks now are pulling back from applications or not offering anymore at all. The reason is the next phase will be “loan forgiveness” this part of the program is going to be mass confusion and a lot of red tape where we see it just being the government changing the rules and time to figure out how to handle the loan forgiveness with each small business.
The best bet is to make sure you work with an accountant who will know how to help you and put you in the right position to help you and your company.