The Trump administration announced on Thursday that it is setting aside $10 billion of additional Paycheck Protection Program (PPP) funding so that small business owners in all communities have access to needed capital to keep American workers employed.
The Treasury Department and the Small Business Administration (SBA) said in a joint news release that the funds, which are being supplied in a second funding round under the PPP scheme, will be lent exclusively by Community Development Financial Institutions (CDFIs), which work to expand economic opportunity in low-income communities.
“The forgivable loan program, PPP, is dedicated to providing emergency capital to sustain our nation’s small businesses, the drivers of our economy, and retain their employees,” said SBA Administrator Jovita Carranza.
“CDFIs provide critically important capital and technical assistance to small businesses from rural, minority, and other underserved communities, especially during this economically challenging time,” Carranza added.
The PPP program extends loans of up to $10 million, which are forgiven if firms spend the money mostly on paying workers, who must be kept on the payroll for eight weeks.
The idea behind the program was to encourage companies not to lay off staff amid the outbreak and so minimize the social impact of the pandemic.
“The PPP has helped over 50 million American workers stay connected to their jobs and over 4 million small businesses get much-needed relief,” said Treasury Secretary Steven Mnuchin.
Also, because firms would spend less time on re-hiring workers and re-booting their businesses once stay-at-home orders are lifted, the PPP scheme would support a robust economic rebound, which Mnuchin and Federal Reserve Chairman Jerome Powell have sought to support through coordinated monetary and fiscal policy.
“We have received bipartisan support for dedicating these funds for CDFIs to ensure that traditionally underserved communities have every opportunity to emerge from the pandemic stronger than before,” Mnuchin said in the release.
The two agencies said in the news release that, as of May 23, CDFIs have approved over $7 billion in PPP loans, including $3.2 billion in round two. The additional $6.8 billion will target entrepreneurs and small business owners in all communities, making sure they have easy access to the financial system.
“These dedicated funds will further ensure that the PPP reaches all communities in need of relief during the COVID-19 pandemic—a key priority for President Trump,” the agencies said in the release.
The PPP small business relief program was established by the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act), which Trump signed into law on March 27.
Under the PPP initiative, more than 4.4 million loans have been approved so far, amounting to over $510 billion for small businesses across America.