Coronavirus PPP loans run out as Congress assesses new funding

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Ryan German kept 40 employees on the job at his restaurant, Caffe Gelato, in Newark, Delaware.

The Paycheck Protection Program provided a lifeline to help him through an unprecedented spring as the coronavirus pandemic traveled the country. The loan, now exhausted, covered seven weeks of pay. But the restaurant faces an unknown future with extensive restrictions on operations and changing consumer preferences.

“We need another injection of capital,” German said. “We try to stay open from all angles, but in the face of a lot of headwinds.”

The Italian restaurant is located near the University of Delaware and has operated throughout the pandemic. She started a business to deliver groceries and home meal kits to customers’ homes. Its staff have also started to choose outdoor services like pressure washing, to keep everyone working, German said.

But uncertainty remains his biggest challenge, German said. The university has switched to distance learning and it is unclear when students will return to campus. The catering activity of the restaurant for weddings and events is on hold.

“What is missing are the summer holidays. There is no such thing as big, busy days in restaurants,” German said. “While we may get 50% of sales on any given day, we miss Mother’s Day, Easter Brunch, University of Delaware graduation.”

Business owners like German are eagerly awaiting the next round of stimulus packages to see what gets done with the P3. The program still has $ 131 billion in funding as of July 17, and businesses that have not yet applied for a loan can do so until August 8.

A proposal from the Republicans of the Senate said Monday it has set aside $ 190 billion for PPP loans. It also allows small businesses with fewer than 300 workers who have seen their income fall by more than 50% to apply for a second round of PPP support, and allows $ 100 billion for loans to seasonal businesses and businesses in the sectors. low-income censuses that can show a drop in income of more than 50%. These areas have been disproportionately affected by the Covid-19 crisis.

Recent data from the National Federation of Independent Businesses reveals that the majority of members surveyed (71%) have now used their entire PPP loan, with the remaining 29% not far behind. In addition, about a fifth of small business owners have or plan to lay off employees after using the P3 loan, and nearly half of borrowers expect to need additional financial support in the next 12 months.

In addition, around a quarter of those polled said they would have to close their doors if current economic conditions do not improve over the next six months, with an additional 22% saying they will not be able to operate for more than seven at twelve o’clock. months under current economic conditions. More than half do not anticipate short-term problems because they are better off financially.

House Small Business Committee Chair Nydia Velazquez (D-NY) said in a recent PPP hearing that some 110,000 small businesses have already closed permanently, of which 7.5 million suffer the same fate. , highlighting the idea that the impact of the pandemic on businesses is far from over.

In a separate hearing, Secretary of the Treasury Steven Mnuchin advocated for automatic cancellation of the smallest loans, under $ 150,000, which made up the vast majority of P3 loans. The business community has supported this idea in recent weeks.

Mnuchin also said he was in favor of an income test, which is in the GOP’s proposal, which some advocates do not favor.

The German, for example, wouldn’t pass a revenue test of more than 50% drop due to his creativity in operations, but he needs support.

“If we have to paint houses or pressure wash or stain decks or if we have to rake leaves in the fall, in addition to serving food, then that’s what we’re going to do, but we don’t. have no intention of asking people. off, “he said.” It’s just that even with all these different efforts, we need the help of the federal government. We need Congress to act. We need Congress to pass the second round of stimulus. ”

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