Treasury Secretary Steven Mnuchin. (Photo: AP) Treasury Secretary Steven Mnuchin. (Photo: AP)

Treasury Secretary Steven Mnuchin said Wednesday that he’d ask Congress for more money to sustain small businesses during the coronavirus pandemic if the administration issues all of the new $350 billion loan pool allotted under the Coronavirus Aid, Relief and Economic Security (CARES) act.

“One of the things I’ve heard is this small-business program is going to be so popular that we’re going to run out of our $350 billion,” he told CNBC’s “Squawk on the Street.”

“If that’s the case, I can assure you that will be top of the list for me to go back to Congress on,” Mnuchin told CNBC. “It has huge bipartisan support and we want to protect small business.”

New Treasury Guidance

Lawmakers have been itching for more guidance to ensure small businesses can tap the loans under Title IV of the law, which includes the Paycheck Protection Program among other provisions. They got what they wanted on Tuesday evening, when Treasury Secretary Steven Mnuchin released a rundown of the program.

Advisors, meanwhile, see the loans as lifelines and are busy digesting the PPP and how it can help them and their clients.

Senate Banking Committee Chairman Mike Crapo, R-Idaho, pressed the Treasury Department and Federal Reserve in a letter to provide guidance on Title IV of the law, which was enacted Friday.

Mnuchin said the first loans will start to flow this Friday.

Advisors Weigh In

Treasury’s guidance couldn’t come soon enough for advisor Leon LaBrecque. “I have been overwhelmed by PPP questions,” says LaBrecque, chief growth officer at Sequoia Financial Group in Troy, Michigan. He’d like to see Treasury set up a “central repository of stimulus information, like a clearinghouse.”

Samuel Boyd, senior vice president at Capital Asset Management Group, urges “nearly all businesses” with fewer than 500 employees to consider the PPP option.

The $2 trillion CARES Act provides $350 billion in funding for small-business loans through the SBA 7(a) loan program, Tony Wilkerson, president and CEO of NAGGL, the trade group for the SBA 7(a) lending industry, explained Tuesday on a webcast.

There are still questions “about the timing of the rollout, the ability for the program to scale, eligibility, and whether the amount appropriated will be enough to deal with anticipated demand,” Wilkerson said.

The PPP, administered by the Small Business Administration, provides small businesses a loan up to $10 million for payroll and other expenses. If all employees are kept on payroll for eight weeks, SBA will forgive the portion of the loans used for payroll, rent, mortgage interest or utilities. Up to 100% of the loan is forgivable.

Small and medium-size businesses need help understanding what programs and facilities are available, their terms and conditions, and a point of contact or inquiry portal for them to discuss access, Crapo told Treasury and the Fed.

The PPP “is massive for small businesses,” says LaBrecque, “with a forgivable loan to small (under 500 employee) businesses for payroll.”

LaBrecque, who heads a special task force for the Michigan Association of CPAs on how to apply for PPP and how it affects nonprofits, says sole proprietors can take the loans as well.

Boyd opines that “next to keeping a roof over people’s heads through mortgage forbearance and an embargo on evictions for the purposes of social distancing and sheltering in place,” the small-business loan expansion “is the most important piece” of the CARES Act.

The law “allows businesses to keep their employees on payroll with a forgivable loan that requires no payment” via the PPP. While maintaining payroll headcount is required for loan forgiveness, “the barriers to receiving the loan are quite low,” Boyd said.

If a business doesn’t maintain its payroll numbers, “the loan is not forgiven and it turns into a 10-year, 4% interest loan,” Boyd adds, “which are still pretty appealing terms.”

Who would benefit the most — advisors or their clients? The loans are “equally important to both,” Boyd opines. “I think the public still understands very little about how generous this SBA loan option is and, once they do understand it, there will likely be a mile-long line at every bank in the country.”

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