SALT LAKE CITY — Just ahead of the holiday break, Congress unanimously supported extending a program that has already propped up COVID-19-distressed U.S. businesses with over $500 billion in potentially forgivable emergency loans.
The stimulus-backed Paycheck Protection Program came to a close on Tuesday with over $130 billion in funds still available, leading both the U.S. Senate and House to approve extending the program until Aug. 8, though the measure still needs a signature from President Donald Trump to move forward.
In Utah, almost 50,000 businesses have received over $5.2 billion in loans under the program, which launched in early April. The Paycheck Protection Program was seeded with $350 billion in funding from the $2.2 trillion stimulus bill passed in mid-March, though the money was tapped out less than two weeks after the loan application process began. Congress re-upped the funding in late April with another $310 billion and has since granted loans, via local lending institutions, to nearly 5 million U.S. businesses.
While the program suffered early issues with application logistics, criticisms over money going to some multimillion dollar concerns — like the L.A. Lakers or Shake Shack — that didn’t really need the help and ongoing concerns about lack of transparency, the money has been critical for thousands of small Utah businesses.
Back in April, Tricia Bennion, owner of two Salt Lake-area nail salons with 52 employees was distraught, having missed out on the first round of the Paycheck Protection Program, even though she had submitted an early application. She was one of some 18,000 Utah business owners who got stuck in a queue when the first round of funding ran dry.
Bennion’s two salons had been closed since mid-March under COVID-19 restrictions and she said a number of her staff members, including several women expecting babies, were unable to secure unemployment benefits. Without some help to navigate the government-enacted shutdowns, Bennion said at the time, the future for her and her employees was looking grim.
Things brightened considerably for Bennion and her Nailed! Salon staff, however, when she was approved for an emergency loan in the second round of the Paycheck Protection effort and was able to reopen her businesses in mid-May when pandemic restrictions began to ease.
“Without this help, there’s no way I would be able to open my doors again,” Bennion said. “The bills don’t stop just because the coronavirus hit.”
Additional help for businesses who borrowed money through the program was provided by federal lawmakers last month, when Congress approved an extension of the allowable window for borrowers to spend emergency funding. The change, Utah Democratic Rep. Ben McAdams said at the time, will help more businesses earn payback forgiveness on the loans.
“What I heard from many small businesses was they were struggling to spend the proceeds within eight weeks because they either weren’t open yet or were seeing lower customer demand,” McAdams said. “Many retail and restaurant loan clients received their funds in mid-April and their businesses weren’t even fully able to open by the eight week deadline.”
Under changes enacted by the Paycheck Protection Program Flexibility Act, businesses now have up to 24 weeks to spend that money and the parameters for where that money can be spent have also been loosened. While the original mandates required borrowers to spend a minimum of 75% of the loans on payroll, the new rules drop that to 60% and allow up to 40% of the funding to be used on other overhead expenses like utilities, rent, mortgage interest debt and other items.
Critics, McAdams among them, have also called on the U.S. Treasury and U.S. Small Business Administration to elevate the transparency of the program. While Treasury Secretary Steve Mnuchin pledged last week to make more information available regarding who received the paycheck protection loans, and in what amounts, that data has yet to be released.
Utah’s Small Business Administration office noted the program should come back online pretty quickly, pending Trump’s signature, and local business advocates said making the emergency funding available again will continue to be a benefit for Utah businesses.
“The Salt Lake Chamber supports the recent congressional extension of the Paycheck Protection Program through the summer,” Salt Lake Chamber President/CEO Derek Miller said in a statement. “The pandemic remains an ongoing concern, and businesses are doing everything they can to meet the needs of customers and employees.
“As they continue to innovate and evolve, this extension will provide businesses additional and necessary flexibility and mitigate economic challenges.”