Paycheck Protection Program
[7] The purpose of the Paycheck Protection Program and loan forgiveness is to provide economic relief to small businesses and certain other entities that have been adversely impacted by the COVID-19 pandemic.
These numbers imply that only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs; the balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms.
[64][65][66][67] Applications for PPP loans are accepted, approved, and disbursed in the order of first-come first-served, until the entire amount appropriated by Congress is depleted.
[91][90] In an exception to the above, the business will not be required to reduce its PPP loan forgiveness due to a wage reductions or a decrease in FTEs in the following cases.
[85] For each of these owner-employees, health insurance benefits and retirement contributions are allowable costs and do not count against the maximum amount of loan forgiveness for compensation above.
[85] For an owner-employee of a S corporation, health insurance benefits and retirement contributions are allowable costs but do count against the maximum amount of loan forgiveness for compensation above.
The guidance addressed issues regarding the submission process; employee, independent contractor and sole proprietor compensation; non-payroll costs and payroll cycle calculations.
Alternatively, the business may elect to calculate the second draw based on the average monthly payroll costs of any 12-month period ending prior to the date of the loan.
[107] On April 21 and 23, respectively, the Senate and House passed the Paycheck Protection Program and Health Care Enhancement Act to add $320 billion of funding to the PPP.
The safe harbor provision that loan forgiveness will not decrease if the business rehires employees and restores wage reductions by June 30 is extended to December 31.
Eligibility would be limited to self-employed individuals and businesses with 100 or fewer employees, and who have experienced a greater than a 50% decrease in revenue compared to recent quarter.
[132] Senators Marco Rubio (R–FL) and Susan Collins (R–ME) introduced the Continuing Small Business Recovery and Paycheck Protection Program Act on July 27.
[135] On December 21, 2020, the House and the Senate passed the Consolidated Appropriations Act, 2021, which includes $284 billion in forgivable loans to small businesses via the Paycheck Protection Program.
[137] Allowable expenses also include out-of-pocket costs from property damage, vandalism, or looting resulting from public disturbances that occurred in 2020 that were not otherwise covered from other sources.
[137] Allowable expenses also include expenses to protect workers, such as air-pressure ventilation systems, filtration systems, physical barriers to ensure social distancing, a drive-through window, an expansion of business space, health screening, the purchase of personal protective equipment, or any other expenditures to adapt the entities' activities in order to comply with government-issued COVID-19 safety guidelines.
[137] Allowable expenses also include the cost of essential supplies for its operating activities, made pursuant to a contract in effect prior to the beginning of the loan period.
By June, 4.5 million businesses had received over $500 billion of taxpayer money, but the exact identities of the recipients were unknown, as Steve Mnuchin said that this was "proprietary" and "confidential."
[142] Eight days later, the Small Business Administration and the Department of the Treasury said that it would release the names, addresses, and other information about recipients of PPP loans exceeding $150,000 each.
[150] Three weeks prior, Dean Phillips (D–MN) had introduced legislation to require public release of the name of many of the recipients of PPP loans, but enough Republicans voted against it that the bill did not pass.
"[153] Businesses with addresses at properties owned by President Trump and advisor Jared Kushner received at least 25 PPP loans totaling over $3.65 million.
[165][166] Several businesses, including Potbelly, Ruth's Hospitality Group, Shake Shack, Nathan's Famous, and the Los Angeles Lakers, decided to repay the loan proceeds.
[173] Several of the largest investment consulting firms in the United States received large PPP loans despite questions as to whether the funds were needed.
According to Reuters, the firm’s President, James Voytko, "said in an e-mail that RVK had followed program guidelines and maintained staffing levels, though he declined to answer written questions about the extent to which the coronavirus pandemic had impacted the company’s finances."
[174][175][176][177] On April 28, Treasury Secretary Steven Mnuchin said that the Small Business Administration would do a "full review" of each PPP loan exceeding $2 million.
[178] Treasury Secretary Steven Mnuchin warned that businesses would held be "criminally liable" if they receive a loan exceeding $2 million and do not follow the rules.
[188][189] A group of software and information technology companies has sued the Small Business Administration and the Department of the Treasury, alleging that the two agencies had improperly added restrictions to the program that were not present in the original law.
[179] On June 25, 2020, the Government Accountability Office released its first bimonthly report of its oversight of the Paycheck Protection Program, as required by the Coronavirus Aid, Relief, and Economic Security Act.
[194] The questionnaires ask about the entity's quarterly revenue, its capital expenditures, its dividend payments, whether it paid $250,000 or more of annualized compensation to any employee during the 24-week covered period, and to what extent its operations were altered due to COVID-19.
[203] Initially, the U.S. Department of Justice charged more than 500 people with illegally claiming PPP loans, collectively totaling hundreds of millions of dollars.
"[204][211] A December 2022 report from the US House Select Subcommittee on the Coronavirus Crisis cited fintech firms and small business lenders, such as Blueacorn, Womply, Bluevine, and Kabbage, as among those that failed to help prevent fraudulent loans, which Insider suggested may jeopardize participation in future programs.
