Goldman Sachs: More than 80 percent of small firms that got PPP loans say they will run out of money by August

More than 8 in 10 small-business owners who got coronavirus relief loans through the Paycheck Protection Program (PPP) say they will run out of funding by the first week of August, according to a Goldman Sachs survey released Tuesday.

In a survey of 1,511 small business owners conducted from July 7 to 8 by Babson College and David Binder Research, 84 percent of respondents said they would exhaust their PPP funding by the end of the month. Only 16 percent said they would be able to continue paying workers beyond that point.

The results are another stark reminder of the peril facing U.S. small businesses more than four months into the coronavirus pandemic and the downturn it caused. A second surge of COVID-19 cases has already slowed the early rebound from lockdowns in March and April and may plunge the U.S. deeper into recession if it continues unabated.

Just 37 percent of small-business owners said they would be able to survive another wave of business closures imposed to slow the spread of COVID-19.

California, Texas and Florida are among several states to reimpose closures this month, and public health officials fear that others may need to follow suit as cases surge across the country.

The PPP was created through the Coronavirus Aid, Relief and Economic Security (CARES) Act signed by President Trump in March. The program furnished more than $521 billion in loans to 4.9 million small businesses that could be forgiven as long as they were used primarily for payroll and overhead costs. Roughly $130 billion of PPP funding remains untapped and may be converted to a longer-term relief program through a follow-up to the CARES Act.

The White House and congressional leaders are aiming to pass another stimulus bill by the end of July, though Speaker Nancy Pelosi (D-Calif.) suggested Tuesday that those talks could stretch into August. The House has already passed a roughly $3 trillion aid bill, but Senate Republicans have rejected that measure as a liberal wish list, preferring to aim for legislation with a price tag closer to $1 trillion.

While there are wide partisan disagreements over unemployment benefits and other direct aid measures, Republicans and Democrats appear closer on small business aid.

Treasury Secretary Steven Mnuchin told lawmakers earlier this month that there is bipartisan support for converting leftover PPP funding into a bailout program for hard-hit industries, and lawmakers in both parties have expressed openness to allowing second servings of PPP loans.

Ninety-one percent of small business owners supported allowing businesses to apply for a second PPP loan, according to the Goldman Sachs survey, and 77 percent of PPP loan recipients said they were able to use the money to maintain at least three-fourths of their payroll.