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About 70 percent of small business owners in the U.S. tried to apply for an emergency loan in the first week of the $349 billion program’s rollout, according to an industry survey.
The $2.2 trillion stimulus package passed at the end of March, officially known as the CARES Act, established the Paycheck Protection Program, which is designed to get cash in the hands of small businesses devastated by the coronavirus pandemic and incentivize them to keep staff on payroll, or re-hire workers who have already been laid off.
Small business owners reported varying degrees of success in receiving the financial aid: About 72 percent were successful in submitting their application, according to a survey released Thursday by the National Federation of Independent Business (NFIB), a trade group for small and independent businesses.
But 28 percent of small business owners said they were not successful in applying for a loan.
“The programs have yet to deliver the loans, frustrating small business owners who are in immediate need of financial support,” the NFIB said in the report.
The vast majority of small business owners who successfully submitted an application have a checking or savings account with the bank. About half said they have an active loan with the bank, and another 24 percent have a business credit card associated with the bank.
Only 1 percent of successful applicants applied at a bank where they had no previous association.
Of the 30 percent who have not yet tried to apply for the program, one-third expect to do so in the next month, while 36 percent said they’re still considering it.
According to a Small Business Administration official, more than 465,000 loans totaling $120 billion had been approved as of Thursday afternoon. More than 3,800 lending institutions -- predominantly community banks -- have participated in the program.
Companies with no more than 500 employees may borrow up to 2.5 times their payroll, or up to $10 million, which can be used for payroll and other expenses, like insurance premiums, mortgages, rent or utilities through June 30. The loans, which are guaranteed by the federal government, will be fully forgiven if 75 percent of the money goes toward keeping workers employed, according to the SBA.
Treasury Secretary Steven Mnuchin on Wednesday asked Congress to approve an additional $250 billion to replenish the loan program. On Thursday, however, Senate Democrats blocked an attempt by Majority Leader Mitch McConnell to unanimously pass the legislation, pushing for changes to the small business aid program and more emergency funding for hospitals and states. The Senate adjourned until Monday.
“Democrats are blocking a 251 Billion Dollar funding boost for Small Businesses which will help them keep their employees,” Trump wrote in a Friday morning tweet. “It should be for only that reason, with no additions. We should have a big Infrastructure Phase Four with Payroll Tax Cuts & more. Big Economic Bounceback!”