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This Proposal Would Allow Businesses to Get another PPP Loan

Congress has expressed interest in approving the next round of Paycheck Protection Program (PPP) loans. If this happens, small businesses can expect a wave of help coming their way. Following the approval, The Prioritized Paycheck Protection Program (P4) Act is a source of funding for small businesses. Businesses that employ less than 100 people can apply for aid through this program.

However, to be eligible for a second PPP loan, the business must have its first PPP loan entirely spent or near exhaustion. Moreover, they should display a 50 percent loss of revenue amidst the COVID-19 pandemic crisis.PPP paycheck protection program

Small businesses are hopeful that conditions on a second round of PPP funding are not too restrictive.

According to Senator Ben Cardin (D-Maryland), small businesses are facing a tough time, and will continue doing so for the near future. He urged Congress to take immediate action to help the businesses deal with the situation in the most efficient way possible. The lawmakers were quick to realize that the lockdown has been severely affecting small businesses. As the lockdown continues, it will continue to impact the small business community negatively. Hence, the approval is necessary for the second wave of PPP loans.

Cardin, the Small Business Committee‘s ranking member alongside other senators, Jeanne Shaheen and Chris Coons, put forward the bill before the Senate. In the House, U.S. Reps. Antonio Delgado (D-New York) and Angie Craig (D-Minnesota) have introduced a similar bill. Coons, a senator from Delaware, mentioned that the Paycheck Protection Program will enable many employers to seek federal aid. He also added that regardless of the closures coming to an end, numerous Delaware businesses would struggle to survive the damages caused by the recent COVID-19 crisis. The senators will initiate the plan in the upcoming Small Business Committee. The Treasury Secretary Steven Mnuchin assured the senators and expressed his open-mindedness for the idea.

It is important to mention that publicly traded companies won’t be eligible for the loan. Additionally, hospitality and lodging businesses chains can only access to a total of $2 million in loans. The legislation’s topmost priority is smaller businesses, particularly those in the restaurant and hospitality industries, as they have been affected most brutally during this pandemic crisis. The rest is for employers with fewer than ten staff members and businesses in rural areas. On the other hand, Kevin Kuhlman, Vice President of Federal Government Relations (NFIB), states that the 50 percent revenue loss is unreasonable, and it might stir conflict amongst many of its members.

According to him, if a business has had 25 percent or 30 percent revenue loss and not entirely 50 percent, they would still be faced with an existential threat, and their struggle should not be discounted, considering their high fixed costs and money owed to vendors.

SBA Rule

Upcoming SBA Rule Changes to Affect Small Businesses [2023 Update]

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During the events at National Small Business Week the Small Business Administration announced upcoming changes due to take effect on July 22, 2013. These changes shift what defines how “small business” is defined. The administration is increasing the size standards in 70 industries. These standards lay out the maximum size a firm can be and still be considered a small business.

This shift in classification is noteworthy because companies that do not currently qualify for this categorization will now be eligible for special SBA loans and government contracts set aside to help smaller firms. Defining much larger businesses as “small” could have costly implications for the “little guy”.

The indicator that the SBA looks to for this classification is the average annual revenue of the company. The threshold that is increasing in about 25 industries will increase over 500 percent from the current $7 million to $35.5. That translates into around 17,000 U.S. businesses that will now be considered a small business.

NAICS Sectors and One NAICS Subsector

There are four NAICS sectors and one NAICS subsector that are revised in the new standards. They are:

  • NAICS Sector 71, Arts, Entertainment, and Recreation
  • NAICS Sector 52, Finance and Insurance
  • NAICS Sector 55, Management of Companies and Enterprises
  • NAICS Sector 11, Agriculture, Forestry, Fishing and Hunting
  • NAICS Subsector 213, Support Activities for Mining

There is already controversy surrounding the amount of contracts that are to be awarded to smaller firms, a mark that the federal government has missed over the past 11 years, according to an article by the Washington Post. A total of 23 percent of federal contracts are earmarked to be granted to companies with the designation from the SBA. Adding more players to the mix will surely increase competition in an already competitive process.