Coronavirus

The Paycheck Protection Program for Small Businesses Will Run Out of Money Today

The $349 billion loan program is meant to help small companies hit hard by social distancing.

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The Paycheck Protection Program—the $349 billion stimulus loan program intended to help struggling small businesses amid COVID-19 shutdowns—will run out of money today, according to a new report from The Wall Street Journal.

As of Wednesday afternoon, the Small Business Administration (SBA) had approved about 1.4 million loan applications totaling $301 billion in funding. The remaining $48 billion is expected to be exhausted by the end of the day, with congressional Republicans and Democrats currently negotiating a deal to make additional funding available.  

Both parties are amenable to funneling another $250 billion toward the loan program, though Democrats have said they will only move forward if the proposal doubles that sum and uses the remaining money for state and local governments as well as hospitals.

"Democrats will not stop fighting for money for small businesses, and hospitals, and testing, and our state and local governments, and more to help fight coronavirus," tweeted Senate Minority Leader Chuck Schumer (D–N.Y.) on Monday.

House Speaker Nancy Pelosi (D–Calif.) wants to add additional stipulations to the small business program that would seek to help rural and minority-owned businesses as well as small firms.

The loan program got off to a rocky start, with the SBA E-tran site crashing and banks confused about loan terms. That's understandable considering the speed with which the program was created and that financial institutions were given loan terms 12 hours before the Paycheck Protection Program officially launched on April 3. 

But the condensed timeline and the first-come-first-serve nature of the program means that many small businesses have not been able to secure any funding. Several banks initially declined applications from prospective borrowers who didn't have a previous history with their institutions. Bank of America, which received the biggest blowback for doing so, eventually relented but required that applicants not have a borrowing relationship with any other institution.

Restaurants, hit exceedingly hard by coronavirus-related social distancing, have come out on the losing end of the application process. Hotels have also struggled, although some have criticized large chains' ability to make use of the small business stimulus: The Paycheck Protection Program carved out an exception for the hotel and restaurant industries, allowing bigger companies to apply for loans so long as they employ less than 500 employees at each physical location.

Businesses that do receive loans may find it difficult to have them forgiven, as they are only eligible for loan forgiveness if they use 75 percent of the funds on payroll expenses. (The original stipulation in the Paycheck Protection Program was 50 percent, but the Treasury Department altered it after the fact.) That will be exceedingly hard for business owners to do when they have no business and rent to pay.

For now, lawmakers are focused on making sure that eligible small businesses aren't shut out altogether. Sen. Marco Rubio (R–Fla.), Chairman of the Senate Committee on Small Business and Entrepreneurship, said that participating banks are no longer operating under vague terms, but that they have a shortage of such lenders. "That's why we created path to bring in new lenders, including non-bank lenders," he tweeted. "To create more access for #smallbusiness we need to speed up bringing in new lenders ASAP."

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  1. How in hell can anyone expect a program named the ‘paycheck protection program’ to help small business?
    Small business does not get a paycheck, only employees get paychecks.
    So a program that enslaves small business owners into becoming clerks for the federal government’s quickly passed and completely not thought out plan is not going to succeed at any level other than feeding graft and egos.

  2. “Run out of money”? What a concept!

    1. Something something Bernie Sanders post-scarcity social democracy

  3. Looks like average loan is for around $200K.
    Better than nothing, but not enough for a lengthy shutdown

  4. RIP Willie Davis, dead at 85.

    1. yeah saw that. RIP

  5. >>congressional Republicans and Democrats currently negotiating a deal to make additional funding available

    they’ve rendered “money” meaningless just make more for these guys too

  6. Delaying the collapse of always economically fragile and no longer economically viable businesses and jobs with this massive government redistribution from the economically resilient and continuing or newly viable is both futile and destructive.

    The government is good at one thing. It knows how to break your legs, and then hand you a crutch and say, “See if it weren’t for the government, you wouldn’t be able to walk”.
    – Harry Browne

    1. They were perfectly viable, the state governments fucked them over.

      Getting small business loans is normal practice. Assuming the state governors will allow them to open again they can pay it back. Meanwhile we have nanny state idiots ratting them out and democrat governors who are cheap suited assholes holding out for word from up high on what to do.

      Also what election did Harry Browne win – as I see it he ran twice for president, getting maybe half a million votes, and never ran for any other office. So I am not certain he knew all the much about government except how to stand around yelling at clouds. Which is a real job at NASA.

      1. Buggywhip manufacturing was a widely viable business until the affordable automobile, just like activities that clump people into contagion spreading masses were viable until a pandemic. Creative destruction is both necessary and unavoidable when new economic realities occur.

        That big government cronyism and Keynesianism are normal practices hardly makes them good practices.

        1. The key difference you seem to be missing is that the pandemic will pass and businesses harmed by it will become viable again, they just need to get through a temporary slump (also, the lockdown orders aren’t just affecting businesses that “clump people into masses” so even that test of viability fails)

    2. In this case, they aren’t even offering the crutch. They are giving you special access to a low-interest loan so you can buy your own. So wonderful!

  7. Hehe… money printer go BRRRRRR

  8. … And… It’s gone.

  9. Huh, see the reason they are running out of money isn’t because democrats are trying to extort more. Bi, this is a case of bith sides are “amenable.” See, suddenly a little cronyism to the tune of doubling the price tag and rewarding government, literally, is just common sense. It’s not like Pelosi is eating $48 ice cream while small businesses are being bankrupt directly thru government action.

    But, hey, reason is totally dedicated to liberty and shrinking government.

    #bothsides

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