Paycheck Protection Program out of money

The U.S. Small Business Administration stopped taking new applications under the Paycheck Protection Program Thursday after exhausting $349 billion in funds in just two weeks.

“I’m hopeful in the near future we can continue processing those loans to provide the critical support necessary to the many small businesses still in need of assistance,” SBA Regional Administrator Dan Nordberg said in a statement. “In the meantime, business owners should remain in contact with their lender and make sure they have the documentation necessary to complete the PPP application in the event congress appropriates additional funding to continue the program.”

In the past 14 days, the SBA said it has processed more loans than it had previously handled the past 14 years combined. In total, 1,661,397 PPP loans were made through 4,975 lenders nationwide.  The number of SBA participating lenders more than doubled from a high of 1,800 prior to the start of the PPP on April 3.

The PPP loans provide 2.5 months worth of payroll expenses to businesses with fewer than 500 employees. If those businesses spend 75% of the loan disbursement on employees by June 30, the loan will be forgivable. Loan amounts not forgiven carry a 1% interest rate and a two-year term.

After initially opening to small businesses and nonprofits, the program was expanded to cover self-employed workers and independent contractors last Friday. But even some businesses who applied at the earliest moment being stuck in a state of limbo.

Vectra Bank Colorado’s online portal for PPP application was ready on the evening of April 7, four days after the program opened. Steven Marks, owner of Front Range Counseling, said he applied that same evening. He received notice Thursday that his loan still hasn’t been processed and that he would have to wait for a future round of funding.

“I feel very helpless and so disappointed,” he said. “I am just powerless at this point.” Marks adds he worries the initial and continued delays with Vectra could result in the end for the counseling business he has built over the past 15 years.

“Banks have done everything they can,” Don Childears, chief executive officer of the Colorado Bankers Association, said in a statement. “Banks have been their customers’ friends and advocates before this crisis, they will be there through it and will be standing by their customers long after this is over.”

To back up his point, Childears noted that the state accounts for only 1.7% of the U.S. population, but has managed to obtain 2.7% of the total PPP loans issued and 2.3% of the total lent out. Using another measure, Colorado has about 2% of the small businesses in the nation.

Congress is working on allocating another $250 billion in funds for the PPP, but negotiations are tied up in a debate about providing funding for other emergency programs. The expectation is that more money will be allocated to the PPP at some point soon.

“Today’s tragic and staggering unemployment figures underscores the dire need for bridge funding to keep more Americans on the job and more businesses afloat during the coronavirus economic crisis. There is absolutely no excuse for failing to get these funds approved immediately,” the U.S. Chamber of Commerce said in a statement.

The SBA urged small businesses to consider its Main Street Lending Program, Emergency Injury Disaster Loans, and traditional 7a program as alternatives. But the EIDL program has also been overwhelmed by applications far behind the $10 billion allocated. it is limiting loans to $1,000 per employee.

The program was supposed to provide a $10,000 allocation in three days times, but applicants report waiting for weeks with no payment.

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