The U.S. Small Business Administration reported Saturday morning that banks had approved more than 725,000 loans from its $349 billion Paycheck Protection Program, totaling over $182 billion. That is progress, coming a week after business owners could first begin applying, a launch marked by confusion caused by lacking and conflicting guidance.
Adding to the concern over application and disbursement delays is the reality that the PPP’s funding isn’t enough. The government has already approved more than half the fund, and this before the April 10th date for the self-employed and independent contractors to apply. Last week, Senate Democrats and Republicans each proposed increasing the program’s funds by $250 billion, but disagree on how to allocate the money.
As demand spikes for federal funds, new guidance and stalled payouts from the SBA on its Economic Injury Disaster Loans and advance grants are adding to small business owner frustrations and fears. Demand for the loans has been so high that it has overwhelmed the agency, even though Congress set aside billions of dollars last month to help the program make loans and grants to small businesses hurt by the novel coronavirus.
The EIDL program was to provide small businesses running out of cash due to the pandemic “with working capital loans of up to $2 million,” according to the Small Business Administration’s website. Small businesses that apply for the loans could also get a cash advance of up to $10,000.
Small businesses have applied for $372 billion worth of Economic Injury Disaster Loans but the amount authorized for the EIDL program by Congress is just a fraction of that amount. As a result, without additional funding, the EIDL program could be a lot less generous and timely than previously expected.
While, the CARES Act provides hundreds of billions of dollars in aid to small businesses, much of this vital money is already running short. It appears, however, that additional help is on the way. Congress is expected to shore up both programs with additional funding and as part of the CARES Act, the Federal Reserve announced preliminary information on a new $600 billion Main Street Lending and other programs.
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