Michael R. Strain, Columnist

The Bad and the Good in the New Payroll Protection Program

Some costly mistakes weren’t fixed in the $284 billion plan. But others were, so let’s give it a shot.

December 21, 2020 at 11:06 PM UTC

Michael R. Strain is a Bloomberg Opinion columnist. He is director of economic policy studies and Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute. He is the author of “The American Dream Is Not Dead: (But Populism Could Kill It).”

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Congress extended the Paycheck Protection Program as part of its economic relief bill finalized on Monday, allocating $284 billion to it. The changes to the PPP are a mixed bag: Some parts of the new bill will set the program back, while others will likely make it more effective. My expectation is that history will judge the program a success and that Congress was right to include a second round in its $900 billion relief package.

The new PPP “second draw” loans are very similar to those under the original plan, passed in March as part of the $1.8 trillion CARES Act. The second round will allow eligible small businesses to take out loans of up to $2 million that can be forgiven — essentially, converted into grants — if businesses meet certain conditions, including attempting to avoid layoffs and wage cuts, and if funds are used on payroll and other variable costs.