The Paycheck Protection Program: Did it Pay Off for Small Businesses?

Senator Jeanne Shaheen and other experts look back and offer their perspectives on the future

The Paycheck Protection Program (PPP) was a small business loan initiative that was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act was passed into law in 2020, during the early days of the COVID-19 pandemic. The PPP was originally supposed to be a $350 billion economic stimulus program that would provide eight weeks of cash assistance to small businesses across the United States. The money was distributed through 100 percent federally guaranteed loans that would be forgiven if the money was spent on approved things like rent, employee compensation, and utilities. The loans were backed and administered by the Small Business Administration (SBA). The purpose of the PPP loan program was to prevent small businesses from closing down and to keep the people who work for them employed. The original price tag for the PPP was $350 billion, and additional funding for this initial phase of it was approved at a later date.

In late 2020, a new bill was passed and signed into law that extended the PPP to help small businesses make it through the darkest days of the coronavirus pandemic during the winter of 2021. The second round of funding ended in May 2021, except for some microloan programs targeted to select minority groups. Funding for the second round was $285 billion.

In total, almost $800 billion, representing 12 million loans, has been distributed to small businesses across the United States through the PPP.

Some of the things that made the Paycheck Protection Program appealing to small business owners are:

• All small businesses were eligible for it, including sole proprietors and independent contractors.
• The loans were 100 percent forgivable if spent on allowable expenses.
• If the loans were not forgiven, they matured in two years at a low interest rate of one percent. Loans that were issued after June 5, 2020, matured in five years.
• The loans covered 24 weeks’ worth of allowable expenses starting from the day the funds were released, also known as the covered period.
• No loan payments were required until the forgiveness application was processed, or ten weeks after the covered loan period ended.
• There was no collateral or personal guarantee required.
• Loans came with no fees.

In the end, a forgiven loan was a non-taxable grant to the small business.

The Paycheck Protection Program: A look back and into the future.

Biz2Credit and its partners recently hosted a webinar with Jeanne Shaheen, the senior United States Senator from New Hampshire. She is a member of the Democratic party and has been a senator since 2009. Prior to that, she was the governor of New Hampshire and an educator and held other influential positions in politics and government. She is a member of the Senate appropriations committee and was a co-author of the Paycheck Protection Program. Senator Shaheen was influential in its shaping and development.

The topics covered during the online event included:

• How Congress went about authorizing the Paycheck Protection Program in 2020 and renewing it in 2021.
• The ways small businesses were impacted — mostly positively — by the program.
• What went right — and wrong — in the implementation of the PPP and the distribution of funds.
• What the Federal government is considering doing next to support American small businesses, including expanding the availability of loans.

Senator Shaheen provided honest and candid responses to questions from business owners about the Paycheck Protection Program and the support they could expect in the years ahead.

In addition to all this, the discussion included representatives from the American Institute of Certified Public Accountants (AICPA), who explained how accountants and the firms they work for played a critical role in the rollout of the PPP and in making it successful. Information was also shared from the Paychex IHS Markit Small Business Employment Watch about how small businesses made it through the COVID-19 pandemic. Biz2Credit’s CEO Rohit Arora also provided an informed perspective about what’s coming next for business owners.

Senator Shaheen’s views on the PPP

During the webinar, the senator offered her perspective on the PPP now that it’s over and answered questions from business owners. Some of the highlights include:

• Senator Shaheen is confident that the PPP and other U.S. government fiscal support was a big reason countless small businesses were able to survive through the pandemic and that the record COVID-19-related recession wasn’t more destructive to the economy. It also helped keep unemployment levels from becoming worse than they were during the pandemic.
• She also feels that there should have been greater cooperation among Congress, the Treasury Department, and the Small Business Administration when it came to distributing PPP funds to small businesses. Senator Shaheen believes that disconnects among the government groups lead to inefficiencies when it came to getting the money into the hands of business owners and it may have allowed some of it to go to organizations it was not intended for.
• She thinks it’s very unlikely the Paycheck Protection Program will be extended again unless the pandemic takes a major negative turn in the future. However, she acknowledges that the current small business loan environment is challenging and that it needs to be opened up, making more cash available to businesses. She plans to work with her colleagues in Congress to come up with a solution to this issue.

Key Takeaways

After Senator Shaheen left the webinar, representatives from the AICPA told personal stories about their clients who were helped by loans from the Paycheck Protection Program. Finally, the employment and economic information shared by Paychex and Biz2Credit painted a somewhat more optimistic picture of the future than small business owners have become used to in 2020 and most of 2021.

If you didn’t participate in this informative webinar, a recording of it is available. You owe it to yourself to check it out so you can better position your small business for everything it could be facing in the months and years ahead.