INDIANAPOLIS — With billions of dollars set to expire in just over a month, Congress must now decide what to do with unused money from the Paycheck Protection Program.
The PPP loan was part of the first round of coronavirus relief funds. It came as part of the CARES Act – an economic stimulus bill with a cut-off date of December 30th.
“The reason it’s unspent is because it was for a very specific purpose,” said Dr. Matthew Will, Associate Professor of Finance at the University of Indianapolis.
Dr. Will said the PPP loans had certain restrictions and could only be used on salary, rent, and mortgage expenses.
“If you have a certain amount of money set aside to fix your car and your car is now fixed but you set aside too much money… well that’s what we have,” said Dr. Will. “We have $455 billion left over… we allocated too much.”
He said Congress is divided on how to reallocate that money — Republicans want to see the money go directly to small business loans, while Democrats want the money to go to individual states. Dr. Will said he would like to see both parties fall somewhere in the middle.
“If you qualify for unemployment benefits, it’s unfortunate if the state doesn’t have enough unemployment money,” said Dr. Will. “There seems to be consensus that maybe what we should do with this money is help unemployed individuals by replenishing the unemployment funds.”
According to Indiana’s Department of Workforce Development, 729,134 Hoosiers have received some form of federal unemployment relief funds — bringing the total $5.9 billion.
Meanwhile, the state’s unemployment rate is improving — dropping from 6.3% in September to 5% in October.
“We’re almost back to full employment. Many people consider between 4% and 5% full employment,” said Dr. Will. “It sounds like we see a light at the end of the tunnel and maybe we’ll be back to a strong economy in 3-4 months.”