The $ 350 billion small business loan program is officially strapped for cash. Lawmakers cannot agree on what will happen next.
TOPLINE The small business emergency loan program, the cornerstone of the $ 2 trillion CARES Act, has now exhausted its $ 350 billion in funding; As millions of small American businesses struggle to cope with the economic downturn caused by the coronavirus, Democrats and Republicans in Congress have been unable to agree on a way to allocate more funds to the program.
On Thursday morning, the Small Business Administration said on its website that it was “unable to accept new applications for the Paycheck Protection Program based on available credits.” Likewise, we cannot recruit new PPP lenders at this time. “
The PPP allocates $ 349 billion in loans to small businesses struggling because of the coronavirus.
Treasury Secretary Steven Mnuchin and Democratic lawmakers will meet on Thursday to try to reach agreement on a package that will immediately replenish program funds, CNN reports.
Republican lawmakers led by Senate Majority Leader Mitch McConnell want to quickly approve an additional $ 250 billion for the program and keep other provisions for future relief legislation.
Democrats, led by Senate Minority Leader Chuck Schumer and House of Commons Speaker Nancy Pelosi, are pushing for the program to expand funding for hospitals and states and local governments and enable more people ( including those who do not have a loan relationship with a bank) to qualify for emergency assistance.
According to The data published by the SBA, the average PPP loan amount is around $ 240,000. The construction industry has seen the most loans to date, followed by the professional, scientific and technical services industries. Over a million loans have been approved.
“The SBA processed over 14 years of loans in less than 14 days,” said Treasury Secretary Mnuchin and US Small Business Administration Administrator Jovita Carranza mentionned in a joint statement Wednesday. “We urge Congress to allocate additional funds to the Paycheck Protection Program – a critical and overwhelmingly bipartisan program – at this point we will again be able to process loan applications, issue loan numbers. and protect millions of additional paychecks, ”they continued.
As part of the Paycheck Protection Program, cbusinesses and non-profit organizations with fewer than 500 workers can apply for loans of up to $ 10 million at a 1% interest rate so they can cover two months of payroll and overhead. If the borrower holds back the workers and does not reduce their wages, the government will cancel most or all of the loan and reimburse the bank lenders. The program launch two weeks ago was chaotic: Banks said federal government guidelines were too slow in coming (lenders were still waiting for information about the program in the last few hours before it launched) and confusing once it finally arrived. Banks have reported overwhelming demand from small businesses seeking financing; Tuesday, JPMorgan
This is a developing story. Please come back for updates.