A key piece of the federal government’s stimulus efforts to help small businesses and their employees has run out of money, shutting out thousands of potential borrowers who were seeking aid amidst the coronavirus-driven economic plunge.
The U.S. Small Business Administration said Thursday morning the Paycheck Protection Program wouldn’t be accepting any more applications for the $349 billion program. The agency reported approving more than 1.6 million Paycheck Protection Program loan applications totaling more than $339 billion from over 4,900 lending institutions.
While that money has been approved, most borrowers are still waiting for those loans to be funded — and for money to even show up in their accounts.
“America’s small businesses are on the brink, trying desperately to keep their doors open and support their employees,” said Brad Close, president of the National Federation of Independent Business, an advocacy group in Washington, D.C. “We’ve been hearing from our members, every day, worried the $349 billion lending program would run dry before help gets to them. Today, their worries became a reality.”
The Paycheck Protection Program loans have an ultra-low 1% interest rate, and the interest on the loans does not have to be paid for the first six months. The program is focused on helping businesses with 500 or fewer employees.
But the biggest draw of theProgram, which launched nearly two weeks ago, is that borrowers that don’t lay off workers in the next eight weeks will have their loans forgiven — principal along with interest. That’s created a crushing demand for the loans, but also confusion as more than a million businesses scrambled to get them.