Roy Thompson with Texas Hill Country Bank provided the program for our ZOOM meeting last Wednesday. He explained the Paycheck Protection Program (PPP).
The purpose of the federal program is to provide forgivable loans to small businesses to cover payroll, and most mortgage interest, rent and utilities over the eight week period after the loan is paid. Employees are to be paid over that length of time in order for the loan to be forgiven. The intent is to keep staff on the payroll, but the government also added significant money to unemployment benefits, so they effectively created competition with themselves. Some workers realized they could do better with unemployment benefits.
The Small Business Administration administers the program but is overwhelmed with the sheer volume of applications. The first round of funding went very quickly and mainly helped larger companies, who were often better prepared to respond to the loans available. But, the second round of funding is expected to help smaller businesses.