The government-backed Paycheck Protection Program officially reopened on Monday for small-business owners who haven't yet applied for forgivable loans designed to blunt the economic pain of the coronavirus pandemic.
The program, a rescue fund established by Congress with the passage of the $2.2 trillion CARES Act at the end of March, was supposed to stop accepting applications on June 30. But last week, the House and Senate voted unanimously to extend the application deadline until Aug. 8. President Trump signed the bill on Saturday.
Roughly $132 billion of the $670 billion allocated to the fund by Congress is remaining, a senior administration official told reporters during a call on Monday.
When the Trump administration first launched the Paycheck Protection Program at the beginning of April, the initial $349 billion set aside for the fund ran dry within 13 days. Lawmakers and small business owners anticipated a similar mad dash during the second round of funding, which resumed on April 27 after Congress injected another $310 billion in the aid program.
Demand for the program began to cool during the second tranche, with some small businesses worried that confusion and uncertainty around the loan's rules, particularly regarding forgiveness, could potentially leave them on the hook for the money.
Congress tried to assuage those fears with the passage of the Paycheck Protection Program Flexibility Act at the beginning of June. Among other things, the legislation eased restrictions on how the money must be spent in order for the federal government to forgive it and essentially transform it into a grant. Borrowers were only required to spend 60 percent of the money on maintaining payroll, rather than the initially required 75 percent. Small businesses that want to qualify for forgiveness also have 24 weeks instead of eight weeks to spend the PPP loan.
Data released by the Treasury Department and Small Business Administration on Monday shows the government issued $521 billion in loans, with an average loan size of $107,000. Combined, the aid program supported about 51 million jobs, or roughly 84 percent of all employees working at small businesses.
At the onset, the program was heavily criticized for granting aid to publicly traded companies that had other avenues for relief -- even as small businesses languished. But the SBA and Treasury Department, which jointly administer the program, scrambled to close the loopholes that allowed multimillion-dollar companies to tap the fund, including pledging to audit any loan worth more than $2 million.
More than $30 billion of loans had been canceled, the official told reporters.