Daily Management Review

The U.S. ‘Paycheck Protection Program’ Ran Out Of Funds


Amid coronavirus outbreak, the economic damages deepens in the U.S. as small businesses are left adrift with the announcement of SBA running out of funds for emergency loan programme used to bear the cost of payrolls of small business workers.

Last week, the U.S. “Small Business Administration” had informed that one of U.S. loan emergency programme worth “$350 billion” which is meant for helping to maintain the payroll of small business workers amid with COVID-19 crisis had “run out of funds”. As a result, thousands of such small business ventures were left without the “needed funds” while they had no other option but to close down due to the pandemic that is sweeping across the globe.
The website of the SBA informed:
“The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding”.
Due to the lack of fund, SBA didn’t have a choice but to put an end in enrolling new lenders for the time being. Moreover, in an email, the SBA informed that almost five thousand banks had made “roughly 1.6 million loans” under the above mentioned scheme, while it forms part of a “$2.3 trillion congressional stimulus package” which has passed last month for battling the economic damage caused by coronavirus outbreak.
Here are some of the names of the biggest lenders, “Wells Fargo, JPMorgan and Bank of America”, who flooded with “hundreds of thousands of loan applications”, in short way more than their capacity to process. The administration under Trump has been urging Congress to pass an additional “$250 billion” for the same so that small businesses can be provided with “guaranteed bank loans” which can be “forgiven” if used for payroll.
However, lawmakers didn’t show their consent yet for the Democrats are pushing for including “other provisions” in the scheme which would finance “minority-owned and rural businesses and assistance for hospitals, state and local governments and the poor” while Republicans are not for the “additional measures”.
The President as well as the C.E.O of the “Consumer Bankers Association”, Richard Hunt said:
“Small businesses are continuing to submit loan applications and existing applications are still pending SBA approval”.
“The millions of men and women who work at America’s small businesses and their families are battling a health crisis while also facing an economic crisis unless Congress authorizes additional funds.”
The “Independent Community Bankers of America” has been worried that the funds are not “being fairly distributed” as it is pushing for “25% of any new funds to be earmarked for community banks with $50 billion or less in assets”. On the other hand, the industry has also asked for introducing changes to the terms and rules of the scheme such as “waiving certain lending compliance checks that they say have slowed their ability to get funds out the door”.