Today, President Trump signed into law the Paycheck Protection Program Flexibility Act of 2020. This bill modifies the Payment Protection Program to ease the pressure on small businesses to use the borrowed funds in time. As CNBC explains,
The new legislation extends the deadline to 24 weeks from eight weeks and reduces the share of funding that must be directed toward payroll costs to 60%. It also pushes back a June 30 deadline to rehire laid-off workers.
The Small Business Administration, which oversees the lending program, has approved 4.5 million PPP loans worth $510.6 billion as of Wednesday evening. More than $120 billion in funding is still available.
This is great news for many small business owners. As my colleague Patrice Onwuka has written about here, the generous unemployment benefits during this time has enticed workers to stay at home instead of returning to work.
While it is good that some workers have not had to worry while being furloughed during the lockdowns, the additional $600 in unemployment benefits for up to four months on top of the state benefits they qualify for means that some workers are earning more on unemployment.
This issue has caused difficulties for different business owners who, thinking they are delivering good news upon receipt of the PPP loans, find that their workers do not want to return to work.
This new additional flexibility will help many of those businesses who found their employees unwilling to come back to work. By extending the deadline and reducing the share of funding that must be directed toward payroll costs, many of these employers will not be so concerned about repaying their loans.
This is the type of assistance that Americans need. As the economic fallout from the pandemic-induced lockdowns continues, assistance must be flexible to adapt to the changing situation.