The Paycheck Protection Program is out of money and closed to most new applications.
Four weeks before the planned end, the federal government’s signature assistance measures for small businesses – the Paycheck Protection Program – which had been devastated by the pandemic, ran out on Tuesday afternoon and no longer received most of the new applications.
Congress provided $ 292 billion to fund the program’s final round of loans. Almost all of the money has now been used up, the Small Business Administration running the program told lenders and their trading groups on Tuesday. (An earlier version of this item incorrectly stated that the actions it described took place on Wednesday.)
While many had predicted the program would run out of funds before the May 31 application deadline, the exact timing surprised many lenders.
“We understand that lenders are now receiving a message through the portal that loans cannot be granted,” the National Association of Government Guaranteed Lenders wrote in a warning to its members on Tuesday evening. “The PPP General Fund is closed to new applications.”
Some of the money – around $ 8 billion – remains available for financial institutions, which generally focus on lending to businesses run by women, minorities, and other underserved communities. These lenders can process applications until the funds are used up, as indicated by the trading group’s warning.
Small Business Administration officials did not immediately respond to a request for comment.
According to a lender who phoned SBA officials on Tuesday, lenders have some cash left to complete processing pending applications.
Since its inception last year, the Paycheck Protection Program has paid out $ 780 billion in inducible loans to fund 10.7 million applications, according to the latest government data. Congress renewed the program in the December bill, expanding the pool of eligible applicants and allowing the hardest-hit companies to return for a second loan.
Legislators extended the program’s deadline to May in March, but showed little enthusiasm for adding significantly more money to their coffers. With vaccination rates rising and pandemic restrictions easing, Congress’s focus on large-scale aid to small businesses has waned.
The government’s recent efforts have focused on the most severely damaged industries. Two new Small Business Administration scholarship programs – for companies in the live event and restaurant industries – have accepted applications in the past few weeks, although no scholarships have yet been awarded.