SBA Announces $349 Billion Paycheck Protection Program is Tapped Out
As part of the $2 trillion CARES (Coronavirus Aid, Relief, and Economic Security) Act passed by Congress and signed by the President, the Small Business Administration (SBA) launched the Paycheck Protection Program (PPP) meant to help small business owners and their employees. These low-cost loans were not only meant to help businesses stay afloat at a time when local and state restrictions are asking non-essential businesses to shutter but also allowed for possible loan forgiveness if business owner’s maintained their payrolls. While $349 billion was originally allocated for the program, it proved to be so popular that word arrived yesterday that the first round of funds had run out.
In a note posted to their website, the agency warns, “The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding.” The development comes less than two weeks after the program began accepting applications. On that note, some banks and institutions got a late start to processing loans as final guidelines were reportedly not published until the night before the program was set to go live. Not only will business owners seeking funding be unable to apply at this time but the SBA will also put a pause on new lenders, with a spokesperson telling NPR, “Similarly, we are unable to enroll new PPP lenders at this time.”
Staggeringly, the $349 billion that the program ran out of in just two week’s time amounts to more than the SBA typically loans out in 14 years. For fiscal year 2019, the agency loaned $28 billion — just shy of the $30 billion they loaned in FY 2018. Additionally, the SBA issued 52,000 7(a) loans, 6,000 504 loans, and 5,500 microloans in FY 2019, compared to 1.6 million PPP loans since April 3rd.
With the first round of funding tapped out, there are now calls for Congress to quickly authorize additional money. In a joint statement, Treasury Secretary Steven Mnuchin and Small Business Administration Administrator Jovita Carranza said, “We urge Congress to appropriate additional funds for the Paycheck Protection Program — a critical and overwhelmingly bipartisan program — at which point we will once again be able to process loan applications, issue loan numbers and protect millions more paychecks.” However, according to Reuters, there are some disagreements about what should be included in a new funding bill. For example Congressional Democrats are reportedly pushing for greater protections to ensure that loans reach minority-owned and rural businesses among others.
The speed in which PPP loan funding ran dry is a testament to just how dire situation is for small businesses owners at this time. As a result, those businesses unable to obtain funding so far may be forced to layoff their employees, adding to the more than 20 million people who have filed jobless claims in just the past month. Before it comes to that, hopefully Congress and the White House can work out an agreement to re-fund the Paycheck Protection Program and allow the SBA to resume processing applications.