The loan application deadline for the Paycheck Protection Program (PPP), that was created to help small business survive the economic downturn due to COVID-19, has been extended until August 8, 2020. The extension was signed into law over the weekend.

The program, which is part of the Cares Act $2 trillion stimulus package, provides funding for small business to pay their payroll costs to bridge the gap until the stay at home restrictions are lifted and economic activity resumes. The federal program also includes a forgiveness provision for employers that continued to pay salaries to their employees and keep them on the payroll during the COVID-19 crisis.

The PPP program has gone through several modifications since it was launched in April, most notably an easing on the restrictions for the amount that was required to be spent on wages to qualify for forgiveness. The initial requirement was that 75% of the money had to be used for wages in order to qualify for forgiveness. That requirement was reduced to 60% and additionally, the time in which it had to be spent, was extended from 8 weeks to 24 weeks.

The initial $349 billion in PPP funding that was allocated on April 3, ran out in less than two weeks. An additional $310 billion that was part of a second round of funding, has lasted longer with about $130 billion remaining. The latest SBA data shows that about $10 billion in total loans were disbursed in the last final month.

This money may not get spent, however, due to a one loan restriction per business.

There are legislative efforts underway to ease the one loan limit so that the remaining money can be allocated to those businesses that need a little extra help. Additionally, there are proposals that include expanding the type of organizations that qualify, including allowing chambers of commerce to apply for a loan. Many chambers were excluded from the original loan program as they are classified as a 501(c)6 organization.

The PPP program has helped small business retain their employees during COVID-19. This has reduced the financial impact to not only to small businesses and their employees, but also to the state unemployment trust fund which has seen unprecedented unemployment claims during the last few months.

While the long-term economic effects of the PPP loans on the American economy are yet to be realized, the program has helped a significant number of small businesses survive the pandemic’s economic impact.