For small businesses to survive, P3 loan forgiveness must be faster and more federal funding is needed
Not only is the original Paycheck Protection Program (P3) closed, those who received funding may also shut down forever, as small business owners have spent their funding on salaries, rents, and other approved expenses since. the start of the program. Without a further injection of government money through a federal “PPP 2” approval, thousands of businesses across the country could go out of business.
New York City is an indicator of how the coronavirus is hitting the U.S. economy, and businesses related to travel and tourism are suffering tremendously. Broadway remains closed until the end of 2020. The Metropolitan Opera is closed until fall 2021. Macy’s announced that its Thanksgiving parade will be altered “to bring magic safely to over $ 50 million viewers nationwide ”. The New Year’s celebration in Times Square will go virtual. These events have implications for tourism-related businesses.
According to The New York Times, several Manhattan hotels have announced their final closure and some experts are planning further closures. Even the largest companies with significant resources are not immune. For example, the 478-room Hilton Times Square and two Courtyard by Marriott hotels in Manhattan announced they would not reopen, joining several others. Restaurants that depend on out-of-town patrons visiting tourist attractions and staying in downtown hotels are barely hanging on, even as the city has relaxed its indoor dining restrictions, which still limit restaurants at only 25% of their capacity. The souvenir shops are in the same boat.
Sadly, these nightmarish scenarios are happening across the country. Visitors to San Francisco are expected to drop to 12.9 million this year, down 52.1 percent from last year’s record 26.2 million visitors, according to the Chronicle of San Francisco. Chicago has seen a drastic drop in tourism and convention revenues. For the first half of 2020, Florida saw its number of tourists drop 35.2%, according to Orlando Weekly. Additionally, the US Travel Association estimates that domestic travel spending will drop by 40%, from $ 927 billion in 2019 to $ 583 billion in 2020, due to the pandemic.
The bottom line is that the loan cancellation should happen as planned, as soon as possible. We cannot burden struggling businesses with debt they cannot afford. On top of that, more federal help is needed to avoid more closures that will likely be permanent.
The American Institute of Certified Public Accountants (AICPA), its business and technology arm, CPA.com, and Biz2Credit have announced their collaboration on a new platform, CPALoanPortal.com, to streamline 1) the process for CPA firms to advise small businesses on both PPP loan cancellation and 2) additional financing options for small businesses that CPA clients may need to fund their growth.
Since the system retains the information, small business owners will not have to re-upload the documents if they apply for another round of funding. Additionally, using the AI built into the platform, business owners can monitor their performance and make business decisions based on the data.
The PPP loan forgiveness phase began on August 10, and according to the estimate of Erik Asgeirsson, president and CEO of CPA.com, the forgiveness process will continue until 2021 and possibly until 2022. Meanwhile, many companies across multiple industries are struggling and need another cash injection to survive. However, “PPP 2” has not yet been adopted.
The PPP is part of the CARES Act stimulus plan and was designed to help businesses affected by the coronavirus pandemic maintain their operations and payroll. PPP loans are forgivable if borrowers follow the salary expenditure guidelines set by the SBA and the Treasury Department, which administer the program.
Canceling PPP loans is just the start of the recovery journey for many small businesses. Many businesses will need continued support and strong funding as the economy continues to slowly recover from the impact of the pandemic. Overcoming the pandemic is taking longer than anyone ever imagined, and time is running out for small businesses if they are to have a realistic chance of survival.
Washington has yet to pass the rules that would make pardoning easier for smaller businesses. Banks are just starting to accept requests for forgiveness. Business owners fear their loans will not be canceled. Meanwhile, we are only weeks away from upcoming payments for businesses that received loans from the start of the program. PPP forgiveness just doesn’t get the attention and clarity it needs to function properly, and “PPP 2” is needed to keep small businesses afloat.