As we continue to recover from the economic impact of the lockdowns, many companies are still fighting valiantly to reach that ‘pivot to recovery’ moment. Cash is tight, business models are changing, and the constant struggle to keep the business afloat is putting pressure on leaders.
Paycheck Protection Program Deadline Extended to August 8
Though recent job numbers do paint a reasonably optimistic picture, many businesses are still not there yet. Luckily, small businesses may have been granted a lifeline, as the Paycheck Protection Program’s deadline looks to be extended to reflect the current state of business. As reported by Accounting Today, the Senate extended the PPP from the 30th of June to August 8. Though still awaiting House approval, the Senate Bill introduced by Maryland Democrat Ben Cardin cleared the Senate by unanimous consent.
When initially introduced, the PPP reflected an expectation that June would see things returning to normal, resulting in the June 30 deadline.
The Small Business Administration, which ran the PPP with the Treasury Department, is set to stop accepting new applications at 11:59 p.m. Eastern Time on Tuesday, June 30. The $669 billion program had approved more than 4.8 million loans totaling $520.6 billion as of Tuesday night, the SBA said. There was $134.5 billion remaining as of Saturday that will be returned to the Treasury unless Congress re-purposes it.
Changes on the Horizon?
As recovery has been slower than anticipated, we may see another wave of funding, as well as modifications to the current program. Initially proposed in the extension bill by Florida Republican Rick Scott, one of the most significant modifications would be the limitation of future loans to businesses who need it most.
However, this was tabled in the name of expediency along with a potential proposal coming next month that would require businesses to show revenue losses in order to qualify for future loans.
Additional modifications reported by Accounting Today include a focus on the smallest companies, a move to allow chambers of commerce to apply for loans and distribute how they see fit, a second loan explicitly for businesses that lost more than half their revenue, and more, all of which will be discussed in the second half of July.
For more information on the PPP and keeping your business afloat, check out the following resources including Controller’s Guide to Managing Cash During a Crisis, Federal Assistance for Businesses during Coronavirus Outbreak, and Four Resources for Understanding the PPP Loan.
Jobs Numbers Looking Positive?
Though the PPP extension will provide a much-needed lifeline, many companies are looking to hit the ground running.
Following our article a few weeks ago on the optimism held by small businesses and the surprisingly less-awful-than-expected construction numbers, recent jobs numbers from ADP point to a somewhat sunny outlook over the past month. A promising sign, the firm reported that private sector employers added 2,369,000 jobs in June and revised upward its May total from a loss of 2,760,000 jobs to a gain of 3,065,000 jobs.
“Businesses of all sizes rehired strongly, although the job gains were disproportionately large for smaller businesses with fewer than 500 employees,” said Mark Zandi of Moody’s Analytics during a conference call with reporters Wednesday. “That may reflect some benefit from the Paycheck Protection Program, which it looks like lawmakers are going to extend for another few weeks until the beginning of August. That looks like that may have had some benefit.”
Similarly, the Bureau of Labor Statistics report is expected to deliver positive news as well, with Zandi predicting BLS’s official unemployment rate will decline to 11.5%.
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