Despite PPP Loans, 14% of Businesses Still Anticipate Layoffs
Back when the COVID-19 crisis first hit, it became clear that relief would be needed to mitigate what was quickly becoming an overnight economic crisis that ultimately spurred a full-blown recession. Thankfully, the CARES Act was signed into law fairly quickly, and with it came relief measures like boosted weekly unemployment benefits, stimulus checks, and the Paycheck Protection Program (PPP), the purpose of which was to help small businesses retain staff by providing forgivable loans earmarked for payroll purposes.
Specifically, businesses were initially told that to get their PPP loans forgiven, they would need to spend 75% of that money on payroll costs. The rules subsequently loosened up, and that threshold was lowered to 60%. Businesses were also told that they'd need to rehire staff by June 30 to be eligible for loan forgiveness, but that deadline was amended to December 31.
To date, the Paycheck Protection Program is credited with returning 2.5 million Americans to a job in May, which perhaps explains why May's unemployment rate was lower than April's. At the same time, an estimated 14% of businesses that received PPP loans still expect to lay off employees once those funds are depleted. And that means that despite the initial success of the program, it's clear that additional aid is sorely needed, and soon.
Source Fool.com
