House Speaker Nancy Pelosi plans to overhaul the Paycheck Protection Program (PPP) by proposing a bipartisan piece of legislation next week. The bill currently being drafted will give businesses who have received PPP funds more flexibility in how they use the funds while remaining eligible for loan forgiveness. The proposed fixes to the PPP program address some of the stringent requirements that were adopted by the Trump Administration through regulation. For example, the House bill to fix the program is reported to give businesses 24 weeks to spend their PPP money instead of 8. The bill is also reported to eliminate the requirement that businesses spend at least 75% of PPP funds on payroll to receive forgiveness. On Monday, President Trump was asked to overhaul the PPP forgiveness requirements by the restaurant industry. President Trump responded by stating, “That’s like one of the easiest requests I’ve ever heard.”
ARA recently polled members on the Paycheck Protection Program (PPP) and found that of those that participated in the survey many respondents applied for and received PPP funds. The most interesting findings in the survey were that over 80% of respondents applied for the PPP with smaller lenders such as regional and local banks and that 94% of respondents received about what they asked for. Another positive finding was that 61% of respondents received PPP funds in 2 weeks or less. Also, it appears that most of the people who applied for PPP loans declined to apply for an Economic Injury Disaster Loan with the Small Business Administration. Finally, the average time to take the survey was under 2 minutes – showing that the survey was quick and easy to answer!
A group of 50 members of Congress from car-producing states put Congress on notice that the auto industry will need economic help as part of any future pandemic relief packages. The next few weeks will be crucial in determining if auto manufacturers will ask for help from Congress due to their manufacturing plants having only just reopened Monday. To highlight the extent COVID-19 has impacted the auto industry, the Federal Reserve found that the output of vehicles and parts declined by more than 70% in April alone. Julie Fream, CEO and president of the Original Equipment Supplier Association said that her industry needs an influx of $20 to $25 billion to prevent the closure of businesses. Mexico, which is also a crucial player in the automotive supply chain for manufacturers, plans to allow the auto industry to reopen on June 1st. The two questions are: (1) whether manufacturing in Mexico will begin as planned; and (2) whether consumer demand for new vehicles remains high enough to allow the auto manufacturers to be financially viable.
Reopening the Economy:
The Centers for Disease Control (CDC) just published a 60-page document providing guidelines for reopening the economy. The document provides information and specific guidance for reopening childcare centers, schools, businesses, restaurants and public transit. For more information on CDC guidance and businesses please see Interim Guidance for Businesses and Employers Responding to COVID-19.