I am not commenting on whether or not they should have been. I am not interested in tying them back to discussion of any other loans or loan forgiveness.
Why call them loans if they are not?
In: Economics
Imagine you have a big box of cookies. Now, sometimes, if someone doesn’t have enough cookies to eat, they might feel sad or worried. So, the government wanted to help businesses so they could keep running during a tough time, like when lots of people couldn’t go to work because of a sickness called COVID-19.
So, the government said, “Hey, we’ll give you some extra cookies to help you keep your business going. But, you need to promise that you’ll try your best to keep your workers paid and your business running smoothly.” They called this help a “PPP loan.”
Now, usually, when you borrow something, like if you borrow a toy from a friend, you have to give it back, right? But in this case, the government said, “You know what? If you use these cookies to help your business and keep your workers paid, you don’t have to give them back! It’s like we’re giving them to you for free!”
So, even though they called it a “loan,” it was more like a helpful gift to keep businesses going strong during a tricky time. That’s why some people might call them “PPP handouts” instead of loans, because businesses didn’t have to pay them back if they followed the rules.
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