New PPP law may have made it more about protecting businesses than saving jobs

[Yo_Mama_Been_Loggin]

On June 10, U.S. Treasury Secretary Steven Mnuchin spoke to the Senate Small Business Committee and offered a glowing report on the performance of the $660 billion Paycheck Protection Program (PPP) initiative that originally was designed to keep workers employed at businesses struggling from the Covid-19 shutdowns and closures.

Mnuchin already has been on the record stating that the surprising May employment numbers (U.S. economy added 2.5 million jobs) may have been a direct result of PPP borrowers hiring back the workers as state governments started opening up commerce.

But the employment and the jobless numbers from May may not be the indication of what's to come in June and beyond. And if there's a dip in rehiring and furloughing or laying off more people, some economists believe it may be the fault of the new PPP rules.

"This new law shifts the program from helping workers survive the crisis to helping businesses stay afloat," said Aaron Klein, policy director of regulation and markets for Brookings in Washington, D.C. "The result will be more workers at small businesses fall through the cracks of this hastily designed safety net."

Klein and others argue that by moving the eligible expense period of the PPP loan for borrowers from eight weeks to 24 weeks and still being able to qualify for forgiveness, the federal government essentially has taken out the incentive for businesses to hire right now.

So far, SBA officials estimate, the $660 billion program (in two tranches) still has about $130 billion left to distribute. The country's largest banks such as JP Morgan Chase (NYSE: JPM), Bank of America (NYSE: BAC), PNC Bank (NYSE: PNC), Truist Bank (NYSE: TFC) and Wells Fargo (NYSE: WFC) collectively forwarded more than 900,000 loans to businesses – about 20 percent of all PPP loans totaling almost $90 billion.

https://www.bizjournals.com/seattle/news/2020/06/11/ppp-jobs-businesses-loss.html?ana=e_sea_bn_editorschoice_editorschoice&j=90514220&t=Breaking%20News&mkt_tok=eyJpIjoiWm1VM1pqbGhNR05oTW1JMCIsInQiOiJONUwxZXNRRVJxazlOZUFlWmNmRUJSRkZPQThWRVNZUlBybklSQllSTnVNVldKM1VKSEJOeFdYK2VHWmZSYzBneTVqZ0ZJWVM5cUtZYksyeFdTTEJVRGVUQ1V2ZEh6RmFcL0FmMHM5bk5VaUlkcWU5Kzh3UmFmMyticFNvenpRS0EifQ%3D%3D

I apologize for the paywall

[JI7]

1. they should have just done direct payments every month to everyone

maybe for 3 months and then vote to extend it if needed.

that would have helped small businesses a lot more than whatever this is.

[durablend]

2. Of course they should have

But that would mean "those people" would be "gittin free stuff and goodies" and we simply can't have that

[Hoyt]

3. Unfortunately, "hasty design" was necessary at time with Democratic support.

I hope the next round of legislation takes into account where we are now, and what changes are necessary.