More than 432,000 PPP loans worth nearly $33 billion were approved in Florida alone. Without additional federal relief, some experts project a flood of small-business bankruptcies this fall as the PPP money runs dry, the Chicago Tribune reported.
“The PPP money kept people out of bankruptcy this summer,” said Brian Shaw, a bankruptcy attorney at Cozen O’Connor in Chicago. “You’re going to see a wave of closures after Labor Day. Businesses just are not going to be able to continue.” The Small Business Administration wrapped up the PPP Aug. 8 after approving more than 5.2 million loans totaling $525 billion.
The program, which was tweaked several times after its April launch, offered businesses with fewer than 500 employees forgivable loans of up to $10 million, if 60 percent of the money went toward payroll. Part of a broader coronavirus relief package, the $659 billion paycheck program has been beset by problems. It initially came under fire after banks allegedly prioritized larger clients ahead of smaller businesses.
Extended for a second round, demand for the loans fell off, leaving about $130 billion of funds on the table. A Sept. 1 House subcommittee report found that billions of dollars in PPP loans may have been diverted to “fraud, waste and abuse” through lack of oversight from the SBA and the Treasury.
The loans covered 24 weeks of payroll, but with no end in sight to the pandemic, the money is looking increasingly like a bridge loan to nowhere. “I think you’re going to see the wave of bankruptcies in September for reasons totally separate from the PPP loan,” said Tom Salerno of Stinson..