Congress could extend small business loan forgiveness timeline to 12 weeks, Mnuchin says

Mnuchin: CARES Act has poured $3T into economy

Treasury Secretary Steven Mnuchin highlights the Main Street Lending Program and the overall impact the CARES Act has had on small businesses throughout the United States.

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Lawmakers could extend the time frame for small businesses to spend the coronavirus aid they received through the $660 billion Paycheck Protection Program, Treasury Secretary Steven Mnuchin said Thursday.

"One of the things we are working with Congress on, and there is bipartisan support, is lengthening the eight-week period," Mnuchin said during an interview with The Hill. "There is bipartisan support to extend that to 10 or 12 weeks … That's definitely something we want to fix."

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Mnuchin acknowledged that some restaurant groups have asked for the timeframe to be extended to 24 weeks.

The Senate is considering legislation that would double the amount of time businesses have to spend the money to 16 weeks, and House Democrats are expected to bring a similar bill to the floor next week.

In a video posted to Twitter this week, Sen. Marco Rubio, chairman of the Senate Small Business Committee, said Senate Republicans are trying to pass a stand-alone bill to extend the PPP loan. The Florida Republican said he expected the bill to receive "99 or 98 votes."

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“We are going to change PPP so that if you got a PPP loan, you have 12 or 14 or 16 weeks to spend the money on payroll,” Rubio said. “Still the same purpose, just some more flexibility because the crisis has changed.”

Under the current rules, recipients of the government-backed aid must spend the money within eight weeks, meaning small business owners who received the earliest loans must spend the funds by May 29.

If at least 75 percent of the money goes toward maintaining payroll — including salary, health insurance, leave and severance pay — the federal government will forgive it.

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The remaining 25 percent can be spent on operating costs like rent and utilities, but may not go toward mortgage principal or pre-payments. Money spent on nonqualifying expenses must be repaid at an annual rate of 1 percent within two years. No payments are required during the first six months.

Although some advocacy groups have pushed for the 75 percent requirement to either be changed or eliminated entirely, arguing that it could hurt tens of thousands of borrowers who cannot meet the threshold, Mnuchin defended the restriction.

"It's called the Paycheck Protection Program, it's not called the overhead protection program," he said.

As of Monday night, about 4.3 million loans worth more than $513 billion had been distributed, leaving roughly $97 billion left in the pot.

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Potbelly secures $10M small business loan for virus relief days after exec gets $100K bonus

Trump touts success of SBA loan program

President Trump says small business owners should receive SBA loans by the end of the week.

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Less than two weeks ago, the federal government launched the $349 billion Paycheck Protection Program, aimed at keeping small businesses afloat as the coronavirus pandemic forces an unprecedented shutdown of the nation’s economy.

Among those that qualified for the loans — businesses with fewer than 500 workers may borrow up to 2 1/2 times their payroll, or up to $10 million — is Potbelly Sandwich Shops, a Chicago-based chain with restaurants throughout the country.

On April 10, the sandwich shop secured a $10 million loan from JPMorgan Chase through the program at an interest rate of 0.98 percent, according to a new regulatory filing. The company said the money will go toward “qualifying expenses” in the Securities and Exchange Commission filing.

The money can be used for payroll and other expenses, like insurance premiums, mortgages, rent or utilities through June 30. The loans, which are guaranteed by the federal government, will be fully forgiven if 75 percent of the money goes toward keeping workers employed and maintaining salary levels, according to the Small Business Administration. If the headcount declines, or salaries and wages decrease, forgiveness will be reduced.

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Payroll costs are capped at $100,000 on an annualized basis for each employee, according to the Treasury Department.

Four days before obtaining the loan, Potbelly promoted an internal employee to the role of senior vice president, chief financial officer and chief strategy officer, effective April 6, according to the filing.

Steven Cirulis, who had worked for the company since December 2019 in a “strategic planning, finance and analytical consulting role,” will be paid an annual one-time cash signing bonus of $100,000 for the promotion, according to the filing.

Cirulis’s annual base salary is $425,000, although the company announced on March 30 that it would temporarily reduce senior executive pay by 25 percent as a result of the virus outbreak. The reduction, referred to as the “Corona Cut,” will continue indefinitely “until removed at the sole discretion of the Company for all senior executives,” the filing said.

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Potbelly did not immediately respond to a request for comment.

More than 1.34 million loans worth nearly $296 billion have been approved by 4,800 lending institutions as of Wednesday afternoon, according to the SBA. If the current trend in demand for loans continues — one week ago, about $50 billion in loans had been processed; that jumped to $160 billion by Friday — the program could be close to running out of money by Friday.

Although there’s bipartisan agreement that the PPP needs additional funding, Senate Democrats last week blocked a measure that would have replenished the fund with an additional $250 billion from being passed, pushing for more emergency funding for hospitals and states as well as some changes to the small business aid program.

Despite the popularity of the program, it’s been riddled with glitches and banks have reported an overwhelming rush of applications. Just 2 percent of small businesses in New York, the American epicenter of the virus, have been approved for relief through it, according to data obtained by the Times Union.

In New York, 40,975 loans totaling more than $11.7 billion were approved for small businesses, the Times Union reported. It’s unclear how many businesses in the state applied for the forgivable loans.

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Close to 812,000 people filed for unemployment over a four-week period in New York, a stunning 1,446 percent increase from the year-ago period. Across the country, over the past four weeks, more than 17 million Amerians have filed first-time unemployment benefits, a stunning sign of the depth of the economic calamity inflicted by the virus.

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