5.5.21 – NSBA
The Small Business Administration (SBA) announced that the Paycheck Protection Program (PPP) has ran out of money, weeks ahead of its expiration date at the end of May. Funds drying up for the nearly $1 trillion program show that businesses are still in need of federal aid to recover from the COVID-19 pandemic.
In a notice sent on May 5, the SBA stated that it will continue funding outstanding approved PPP applications, but that new qualifying applications will only be funded by Community Financial Institutions, financial lenders who serve underserved communities. Some money remains available for lenders to finish processing pending application, which were already submitted to the agency. However, the applications which were not yet submitted for approval are at risk of not being processed.
The funding shortfall was predicted when Congress extended the application deadline from March 31 to May 31 without adding additional funding. However, the cash shortfall still caught lenders by surprise, since the SBA did not issue a public warning in recent weeks.
This news means that businesses can no longer apply for forgivable PPP loans to help them recover from the pandemic. However, it is possible that Congress could add funding for the program, given the continued demand.
Senator Ben Cardin (D – Md.), the Chair of the Committee on Small Business and Entrepreneurship, said that he “remains open to a bipartisan agreement to add funds to the program.” Similarly, Rep. Nydia Velázquez (D – N.Y.), Chair of the House Small Business Committee, also said she is open to a deal to extend the program.