'Paycheck Protection Program' May Run Out of Funds for Small Businesses on Wednesday - Should Congress Act?

UPDATE - 4/15/20 (4:30pm EDT): The Small Business Administration's Paycheck Protection Program (PPP) may allocate the last of the $350 billion in funds it has available for forgivable small business loans by the end of Wednesday, but it's unclear whether Congress will reach an agreement to increase its funding.

• Over 1.4 million PPP loans totaling more than $305 billion as of Wednesday afternoon.
• The Trump administration and Republicans are requesting that an additional $250 billion be added to the PPP through a "clean" bill that does nothing other than add more funding. An attempt to pass such a bill by unanimous consent was blocked by Democrats on April 9th, but they may try again during the Senate's next pro forma session on April 16th.
• Democrats in the House & Senate are refusing to grant unanimous consent for a bill that solely funds small businesses. They are demanding an additional $150 billion in funding for state & local governments, plus $100 billion for healthcare providers.

What’s the story?

• The “Paycheck Protection Program” may run out of funds used to provide forgivable loans to small businesses before the end of the week, and it’s unclear whether Congress will be able to reach an agreement to increase its funding to satisfy the high demand.
• Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was signed into law by President Donald Trump on March 27th, $350 billion in funding was provide for loans to small businesses that can be forgiven if they’re primarily used to keep workers on the payroll. Lenders began accepting PPP applications on April 3rd.
• As of the morning of April 13th, the Small Business Administration (SBA) said it had approved about 904,000 applications and committed $221 billion in funding for those loans. The SBA recently began disbursing funds to small businesses with approved loan applications.
• PPP loans have been approved at a rate of about $3 billion per business hour since it went live. With more lenders expected to begin participating in the program this week & PPP eligibility recently expanding to self-employed workers, lending may accelerate and the remaining funds could be committed before the end of this week or sometime next week.
• There are roughly 30 million small businesses in the U.S. that collectively employ about 60 million Americans.

What’s happening in Congress?

• On April 9th, Senate Majority Leader Mitch McConnell (R-KY) attempted to pass a “clean” bill that would’ve simply boosted funding for the PPP by $250 billion (to a total of $600 billion) by unanimous consent during the pro forma session. 
• Senate Democrats objected and blocked the clean bill, then offered a $500 billion bill that would’ve provided $125 billion for the PPP, $125 billion for a new small business loan program, $100 billion for healthcare providers, and $150 billion for state & local governments. The Democratic bill was then blocked by a Republican objection.
• The Democratic bill would’ve doubled the funds provided under the CARES Act for both healthcare providers and state & local governments. The first $30 billion in funding for healthcare providers of the $100 billion allocated by the CARES Act was disbursed on April 10th. State governors are requesting $500 billion in “unrestricted fiscal support” in addition to the CARES Act funding to alleviate budgetary shortfalls.
• After no progress was made in resolving the impasse in time for the Senate’s pro forma session on April 13th, the earliest that the chamber can pass legislation is now the pro forma session scheduled for Thursday, April 16th.

To learn more about the Paycheck Protection Program and how small businesses can apply, click here.

To learn more about the Paycheck Protection Program and how self-employed individuals can apply, click here.

— Eric Revell

(Photo Credit: iStock.com / courtneyk)