The PPP Loan Deadline Is Tomorrow, With $130 Billion Still Unspent

When the first round of Paycheck Protection Program loans totalling $350 billion was depleted in just two weeks, there was fear that a second wave of loans, replenished to the tune of $310 billion in late April, would also run out. But as the June 30 loan application deadline looms — and after a more recent revamping of several of the program’s initial flaws — more than $130 billion in would-be loans remains untouched. According to an official report, that’s more than three times the amount of money that’s been loaned to restaurants and others in the “accommodation and food service” category, which has been particularly impacted by COVID-19, thus far.

From inception, the loan program has faced criticism. During the first wave of loan approvals, some major chains like Shake Shack and Ruth’s Chris Steakhouse received multi-million dollar loans, while small businesses, which the program was created to support, were hung out to dry. In early June, a bill overhauled the original program as it was written, changing the loan amount restaurants would have to spend on payroll (from 75 percent to 60 percent), and extending the period of time recipients could use the funds, as well as the timeline in which they would have to hire workers back (both were extended from June to December). Those changes were designed to make the loans more reasonable for truly small businesses.

But instead of being depleted, the loan program has “stalled” since May, according to the Washington Post, so that by June 20, $128 billion was still available. Loans that were returned, along with accidental duplicate loans that were cancelled, totaled $38.5 billion by the end of the month. By no means does the current surplus mean restaurant owners have secured the funds they need to weather the COVID-19 crisis; it only points out the program’s inability to distribute loans to those who desperately need them. Among those that have struggled most to secure loans since the economic downturn are Black restaurant owners, who already faced disproportionate challenges and hurdles when attempting to secure funding for their businesses before the pandemic. Even as money was returned in May, Black and Latino restaurant owners continued to have difficulty accessing resources, and the loans they were granted were almost always lower than the ones they requested, according to a study done by the Global Strategy Group.

The loan program likely wouldn’t have stalled — or at least, not so dramatically — if more resources had been put into reaching and supporting communities that have historically been ignored and avoided by major banks and lenders. Instead, these businesses were left to fend for themselves.

So what’s next, when $130 billion is on the line? Lawmakers have expressed intent to tap into the remaining funds, and make further assistance available. On June 18, Senators Ben Cardin, Chris Coons, and Jeanne Shaheen introduced the Prioritized Paycheck Protection Program (P4) Act, which would extend the loan application deadline until December 30, and open new lending for businesses with 100 employees or less, that have exhausted their initial PPP loans. The bill would “provide eligible small businesses with as much as 250 percent of monthly payroll costs.” A portion of funding would be reserved for businesses with 10 employees or fewer, and “small businesses in underserved and rural communities.” On June 24, Coons told Yahoo Finance that he was working on getting a Republican co-sponsor on the bill. Its current status is unclear.

That bill is unrelated to the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive (RESTAURANTS) Act of 2020, which would allocate $120 billion to assist independent restaurants and has bipartisan support.

With the PPP loan application cutoff tomorrow, and a plan for the remaining funds unclear, business owners are left wondering what will become of the money that hasn’t been distributed. Will another round of funding reach restaurant owners who have yet to see any support? Or will the restaurants that most need assistance continue to struggle and close, as more than $100 billion returns to the Treasury?