A new bill looks to extend the Paycheck Protection Program, giving small business owners some additional relief.
The new bill is called the P4 Act and allows businesses who have less than 100 employees to apply for a second loan. One of the conditions is that they show a loss of half of their revenue because of Covid-19 and that they have exhausted or will soon exhaust their first Paycheck Protection Program loan.
“We are facing an uncertain future. We do not know how long it will take to eradicate coronavirus and return to normal. People and businesses who lost their income during the pandemic need help to survive. Now more than ever, politicians must work together to create a corona aid relief bill to ease the financial suffering of their people,” says Brad Nakase, who is one of the best employment lawyer in California and awarded the prestigious “American Institute of Trial Lawyer’s 2020 Litigator of the Year.”
Bill co-sponsor Ben Cardin
Senator Ben Cardin believes that this program is key in supporting small businesses and allowing the economy to recover. He is one of the co-sponsors of the bill which is vital in Congress’ $2 trillion CARES program. $659 billion of this money has gone towards the PPP program in the form partially forgivable loans to cover small business’s payroll for eight weeks.
However, the Covid-19 shutdown has continued much longer than the PPP program was designed to cover. This means that many employers are in need of additional aid, which is why the P4 bill is being drafted.
Under P4, $25 billion or 20% of the PPP funds (whatever is less) will be earmarked for businesses with less than ten employees, especially those in rural communities. The Small Business Association will be giving lenders guidance on which businesses to prioritize.
P4 funding not for publicly traded companies
Publicly traded companies will not be eligible for P4 funding. Hospitality and accommodation businesses that have multiple locations will only be able to claim a total loan amount of $2 million.
Kevin Kuhlman of the National Federation of Independent Businesses had pointed out that businesses that have up to 30% loss will be struggling too if they have high fixed costs. The requirement that the business has a 50% loss of revenue might mean businesses are seriously struggling when they apply for the loan.
The new bill was introduced on the 18th of June and will allow a second PPP loan for certain small businesses. The company owners must show that money is required for payroll and other costs laid out in the legislation.
As Senator Ben Cardin points out, every business that is saved is going to be able to provide jobs after the pandemic. The P4 program is a key part of the government’s CARE program, which will support the economic recovery of America. The shutdown has lasted much longer than anyone thought while drafting and passing the CARES Act; therefore, additional programs such as P4 are required to ensure the survival of small businesses.
Interesting related article: “What is Business Finance?“