The Small Business Administration says it's loosening payroll restrictions to allow partial loan forgiveness under PPP small business aid program
- The SBA amended its rules to allow for partial loan forgiveness even if the majority of a government-backed loan wasn't directed toward payrolls.
- The SBA now says 60% of the forgiven loan amount should go toward worker paychecks.
- "There's no question in my mind the increase in jobs was a direct result of the
PPPand reopening the economy," Treasury Secretary Steven Mnuchintold CNBC on Thursday.
The Small Business Administration amended its rules governing the
The SBA issued the new rule in the early hours of Thursday morning. It's set to make partial loan forgiveness available to vastly more small businesses that don't spend the majority of their cash on workers' paychecks.
Instead, 60% of the amount eventually forgiven should go toward payroll, the SBA said.
The SBA offered an example: "If a borrower receives a $100,000 PPP loan, and during the covered period the borrower spends $54,000 (or 54 percent) of its loan on payroll costs, then because the borrower used less than 60 percent of its loan on payroll costs, the maximum amount of loan forgiveness the borrower may receive is $90,000."
PPP was implemented back in March under the
But many businesses criticized the restrictions as onerous and faulted rule changes that triggered confusion. Other critics blasted the program when large publicly traded companies were found to be drawing funds from it.
Around $130 billion in PPP funds still sits unused, The New York Times reported. Recently, President Donald Trump signed a bipartisan law relaxing the threshold of a loan going toward worker payrolls to 60% to qualify for loan forgiveness. The law also lengthened the amount of time within which the loans needed to be spent to 24 weeks from eight weeks.
The latest jobs report on Friday surprised economists as the unemployment rate dropped to 13.3%, while many expected it to surge near 20%. Experts and the Trump administration said the program helped salvage jobs to a greater extent that previously thought.
"There's no question in my mind the increase in jobs was a direct result of the PPP and reopening the economy," Treasury Secretary Steven Mnuchin told CNBC on Thursday.
During a congressional hearing on Wednesday, Mnuchin told lawmakers that further changes to the program were imminent, such as allowing more business owners with a criminal record to tap into PPP.
- Towards a Greener Footprint: Prioritising Carbon-Neutrality Makes Good Businesses Sense! Are Indian Firms Making the Transition?
- Netflix confirms an ad supported tier is coming to its streaming service by year end
- Accenture, Cognizant could see revenue growth but a strong US dollar could spoil the party
- Kharif sowing is off to a weak start with extended dry spells and floods
- Best ladder for home use in India