Paycheck Protection Program Loans Kept Businesses Operational

Female business owner filling out forms to apply for a Paycheck Protection Program
Artwork by Anthony Faust
Female business owner filling out forms to apply for a Paycheck Protection Program

The Paycheck Protection Program (PPP) was a federal loan program that was created in response to the economic impact of the COVID-19 pandemic. The program was designed to provide small businesses with financial assistance to help cover their payroll and other expenses, such as rent and utilities.

The PPP loans were provided by banks and other lending institutions and were backed by the Small Business Administration (SBA). Eligible small businesses could apply for the loan, which could be for up to 2.5 times their average monthly payroll costs.

One of the key features of the PPP loans was that they could be forgiven if certain conditions were met. Specifically, if the loan proceeds were used for eligible expenses such as payroll, rent, and utilities, and at least 60% of the loan was used for payroll, the loan could be forgiven.

To apply for a PPP loan, small businesses had to provide documentation such as payroll records, tax forms, and other financial information to the lender. The lender would then review the application and, if approved, provide the loan to the business.

The PPP loan program was rolled out quickly and its goal was to keep the companies operational to avoid layoffs and keep the economy going. To that end, it was a very successful program, especially given how quickly it was rolled out. But it also had some limitations, and in some cases the loan application process and funds distribution was overwhelming to some small business owners.

To nobody’s surprise, there was a lot of fraud involved. In fact, The New York Times cited a paper that said over 15% of PPP loans displayed indicators of possible fraud. Of the 11.8 million loans granted by the PPP, approximately 1.8 million exhibited signs of fraudulent activity. Their calculations suggested that approximately $76 billion of PPP loan funds were acquired through illicit means, which accounts for nearly 10% of the program's total budget of nearly $800 billion. Cynical people point to a government program which was that large and set up that fast and view a 10% fraud rate as a pretty low number, all things considered.

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About the Author

My life as a husband and father transformed during the COVID-19 pandemic. Sent home from work in March 2020, I've yet to return to the office. Adapting to the new pandemic world proved challenging for us all.

However, we managed to find silver linings. Drive-by birthdays brought joy to my kids' friends. I'll never forget stumbling upon a heartfelt hand-painted rock during my jog, reminding us that we're all in this together. Regular Zoom happy hours with close friends created cherished memories.

While quality time with my family was a blessing, we also faced hurdles. Assisting my youngest daughter with frustrating math homework on a poorly designed iPad app tested our patience. Both girls struggled with wearing masks during sports and school.

Sadly, witnessing COVID-19 being politicized and witnessing the closure of small businesses while the wealthy thrived was disheartening.

I wrote this book to document our experiences, learning from them and striving for better decisions in the future. Join me on this rewarding journey of resilience and growth.

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