A new relief program headed by the Small Business Administration (SBA) to help companies during the coronavirus pandemic has already run out of money. The program, known as the Paycheck Protection Program (PPP), had earmarked around $349 billion in funds. The PPP first began accepting applications on April 3, meaning the program reached its limit within two weeks of opening.
According to CNBC, the SBA website claimed that it is “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.”
The program had hoped to help small businesses survive during lockdown measures, with conditions that included having employee and compensation levels maintained to qualify (per the United States Treasury website).
The announcement comes on the heels of dire unemployment news. A record-breaking 22 million Americans have reportedly filed for unemployment due to the coronavirus pandemic, with companies such as Disney either letting go or furloughing staff due to the quarantine.
The program, which was signed into law by President Donald Trump in March, had operated on a first-come, first-serve basis. Small business and sole proprietorships could begin to apply on April 3, with independent contractors and the self-employed given an application start date on April 10.
The CARES Act will give small businesses the funds they need to stay in business and keep their employees on payroll!
➡️ $350B in forgivable loans
➡️ $10B in emergency assistance grants
➡️ Next 6 months of existing SBA loan payments covered pic.twitter.com/GSkUAWKHco
— The White House (@WhiteHouse) March 29, 2020
The first hint of the application overload came on Wednesday morning when the SBA announced that it was approaching its limit after approving over 1.3 million loans that totaled to $296 billion. By the evening, the promised relief money had jumped to $315 billion, a source told CNBC.
In response to the program’s demand, Congress is reportedly considering extending funds.
Democrats and Republicans had previously attempted to increase the monetary limits of the program upon reports of its popularity. Republicans, under Majority Leader Mitch McConnell, had originally wanted to give the program another $250 billion; the proposal, however, was blocked by Senate Democrats.
In return, Republicans later rejected the Democrats’ measure to give $125 billion to the PPP, citing concerns about giving the other $125 billion to what Republican Sen. Marco Rubio deemed “unrelated items” (per The New York Times).
Democrats, however, countered that their conditions included money going to “community-based lenders” and placing new disclosure requirements on the administration.
Meanwhile, experts are not surprised at the news that the program has already run out of funds.
“Small businesses are the backbone of the American economy, employing 47% of all workers,” according to Ron Temple, the head of U.S. equity at Lazard Asset Management. “In high-cost cities, the median small business has only enough cash to cover 2-3 weeks of expenses.”