More than eight out of ten small business owners who got coronavirus relief loans through the Paycheck Protection Program (PPP) say they will run out of funding by the first week of August, according to a Goldman Sachs survey released Tuesday.
In a survey of 1,511 small business owners conducted from July 7-8 by Babson College and David Binder Research, 84 percent of respondents said they would exhaust their PPP funding by the end of the month. Only 16 percent said they would be able to continue paying workers beyond that point.
The results are another stark reminder of the peril facing U.S. small businesses more than four months into the coronavirus pandemic and the downturn it caused. A second surge of COVID-19 cases has already slowed the early rebound from lockdowns in March and April, and may plunge the U.S. deeper into recession if it continues unabated.
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Just 37 percent of small business owners said they would be able to survive another wave of business closures imposed to slow the spread of COVID-19.
California, Texas, and Florida are among several states to reimpose closures this month, and public health officials fear that others may need to follow suit as cases surge across the country.
The PPP was created through the Coronavirus Aid, Relief, and Economic Security (CARES) Act signed by President TrumpDonald John TrumpWayfair refutes QAnon-like conspiracy theory that it’s trafficking children Stone rails against US justice system in first TV interview since Trump commuted his sentence Federal appeals court rules Trump admin can’t withhold federal grants from California sanctuary cities MORE in March. The program furnished more than $521 billion in loans to 4.9 million small businesses that could be forgiven as long as they were used primarily for payroll and overhead costs. Roughly $130 billion of PPP funding remains untapped and may be converted to a longer-term relief program through a follow-up to the CARES Act.
The White House and congressional leaders are aiming to pass another stimulus bill by the end of July, though Speaker Nancy PelosiNancy Pelosi70 progressive groups call for next Foreign Affairs chair to reflect ‘progressive realism’ House to vote next week on ridding Capitol of Confederate statues Eye on gavel, Wasserman Schultz proposes panel on racial inequality in spending MORE (D-Calif.) suggested Tuesday that those talks could stretch into August. The House has already passed a roughly $3 trillion aid bill, but Senate Republicans have rejected that measure as a liberal wish list, preferring to aim for legislation with a price tag closer to $1 trillion.
While there are wide partisan disagreements over unemployment benefits and other direct aid measures, Republicans and Democrats appear closer on small business aid.
Treasury Secretary Steven MnuchinSteven Terner MnuchinMcConnell in talks with Mnuchin on next phase of coronavirus relief On The Money: Supreme Court upholds NY prosecutors’ access to Trump’s tax returns, rebuffs Congress | Trump complains of ‘political prosecution’ | Biden rebukes Trump, rolls out jobs plan Mnuchin: Next stimulus bill must cap jobless benefits at 100 percent of previous income MORE told lawmakers earlier this month that there is bipartisan support for converting leftover PPP funding into a bailout program for hard-hit industries, and lawmakers in both parties have expressed openness to allowing second servings of PPP loans.
Ninety-one percent of small business owners supported allowing businesses to apply for a second PPP loan, according to the Goldman Sachs survey, and 77 percent of PPP loan recipients said they were able to use the money to maintain at least three-fourths of their payroll.