New guidelines for small business loans
SALT LAKE CITY – When small businesses learned about the small business loans that were put in place to help them survive the shut down due to that pandemic they were relieved. The problem was the restrictions on the conditions of using the money and having the loans forgiven.
Paycheck Protection Program Flexibility Act
Now with the new program called the Paycheck Protection Program Flexibility Act, a bipartisan measure that was signed last Friday by President Donald Trump, businesses now have more flexibility with how and when the funding is used. Instead of having to use the funds in two months business owners now have six months to use the funds.
KSL-TV spoke with Teton Toys, a small business in Lehi specializing in toys. They were dealing with the decision if they could stay open and how to keep their six employees on the payroll. The CARES Act was meant to help with these issues, but there was not enough flexibility in the original program for many.
Howard Headlee, the president of the Utah Bankers Association, “I think we started out with a fairly one size fits all solution.” He said that the loans were helpful, but the ability to have the loans forgiven was very rigid because of the conditions that had to be met for that forgiveness.
Headlee went on to say, “Our goal is to make sure that 100% of these PPP loans are forgiven.
The new conditions for the small business loans
Before businesses had just two months to use the funds, under the new program they now they have up to six months.
Also on the original plan, 75% of the funds had to be used for payroll, which has dropped to 60%.
Another change, companies now have until Dec. 31st to rehire employees that were let go because of the pandemic.
The reaction to the new changes
Robert Spendlove, Zion’s Bank Senior Economist said, “We were starting to see the downside of some of those unintended consequences.” Spendlove was pleased to see that the people that make the decisions are paying attention and making the adjustments that needed to be made.
Rather than trying to catch small businesses, or catch people and put them in a difficult position, Congress is working for them and really trying to help them.
Spendlove went on to say, “Rather than trying to catch small businesses, or catch people and put them in a difficult position, congress is really working for them and really trying to help them.”
These new conditions are taking a lot of pressure off of everyone from the business owner to the employees.
Officials have also said that the Paycheck Protection Program still has money available and any businesses that are in need can still apply. The deadline to apply is June 30th.
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