Small business loan program runs out of money, no longer accepting applications
The program ran out of cash Thursday morning
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A popular small business relief program ran out of funds on Thursday morning, as billions of dollars in additional coronavirus aid remain stuck in congressional limbo.
The Small Business Administration said on its website that the agency is "currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time."
Although Republicans and Democrats agree they need to replenish the program, a $349 billion fund approved last month as part of the CARES Act, they have remained at an impasse over how to do so.
Last week, Treasury Secretary Steven Mnuchin asked Congress to allocate $250 billion more for the program. But a GOP attempt to approve it was rejected by Senate Democrats, who maintained that additional cash should include emergency funding for hospitals and states, as well as some changes to the small business aid program. Republican aides have said conservatives will reject any spending beyond the PPP.
"The President and his Administration will continue to prioritize relief for all those affected by this unprecedented crisis, which is why Congressional Democrats must stop playing politics and blocking additional emergency relief for our Nation's small businesses," White House spokesperson Judd Deere said in a statement.
Lawmakers from both houses are working from their home states as a result of the outbreak and are unlikely to return to Washington, D.C. until at least early May.
The program, which launched less than two weeks ago, provides loans at ultra-low interest rates to businesses with fewer than 500 employees to incentivize them to keep staff on payroll, or rehire workers who have already been laid off. If at least 75 percent of the money goes to keep employees on the payroll, the federal government will forgive the loans.
There were 1,611,397 loans approved that depleted the $349 billion fund. Nearly 5,000 lenders participated, according to SBA data.
The stimulus bill passed at the end of March was $2.2 trillion, the largest in recent memory.
The evaporation of the program's funds comes at a critical time: New figures released by the Labor Department on Thursday revealed that in the four-week period through April 11, 22 million Americans filed for first-time unemployment benefits, a stunning sign of the colossal economic damage inflicted by the virus outbreak. Before the pandemic, the largest number of Americans to seek jobless aid in a four-week stretch was 2.7 million in the fall of 1982.
Time is imperative for owners. Nearly one in four small businesses has shut down temporarily in response to the crisis, while another 40 percent expect to do so within two weeks, according to a survey published by the MetLife & U.S. Chamber of Commerce Small Business Index.
If owners don’t receive further support, about 43 percent have warned they have less than six months to a permanent shutdown. One in 10 say they have less than a month until a permanent shutdown is inevitable, the survey found.