The lending program meant to keep small businesses afloat amid the coronavirus crisis is officially out of funds, less than two weeks after it was chartered.
Small business owners seeking a loan guaranteed by the Paycheck Protection Program (PPP) were greeted Thursday morning by a statement from the Small Business Administration that, "based on available appropriations funding," it was currently unable to accept either applicants or new lenders. A spokesman for Sen. Marco Rubio (R., Fla.), who chairs the Senate small business committee, told the Washington Free Beacon that the program was just shy of its $349 billion cap, with remaining funds reserved for processing fees.
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The SBA has officially exhausted the funds available for its emergency small business lending program: pic.twitter.com/kESMMvBexn
— Phil Mattingly (@Phil_Mattingly) April 16, 2020
The program has been one of the most heavily demanded during the current recession, and Republicans warned last week that it would run dry. Democrats, however, blocked a $250 billion infusion after Republicans refused to package it with additional funding for hospitals and state and local governments.
The result is that, as of Thursday, hundreds of thousands of small businesses hang by a thread. Their collapse would be catastrophic for an already battered economy that could take years to recover.
"Seven hundred thousand applications today are in limbo—are stuck and cannot be processed—because [Democrats] are playing political games with it," Rubio said during a Fox News appearance. "This has to end. This is no time for this kind of horse-trading. This is no time for a game of chicken with the jobs of millions of Americans."
Democratic leadership has stayed firm in its opposition to a standalone bill. Senate Minority Leader Chuck Schumer (N.Y.) tweeted Thursday that while he agrees small businesses need money, "Dems actually want to get it into the hands of all who need it," adding that Democrats are focused on local law enforcement and medical needs.
Our small biz programs need more money now
We all agree
But Dems actually want to get it into the hands of all who need it
That's not what's happening when websites are crashing, mom & pop shops and minority businesses are shut out, bigger banks are loaning to fav customers
— Chuck Schumer (@SenSchumer) April 15, 2020
Some Democrats are showing displeasure with their leadership's tactics, however. Sen. Kyrsten Sinema (Ariz.), one of the upper chamber's most moderate members, on Thursday called for the Senate to provide additional funding "by unanimous consent," signaling her support for the Republican plan.
The PPP program is going to run out of funding soon – the Senate should approve add’l funding by unanimous consent ASAP. Small businesses need our help to survive during this emergency. https://t.co/kYTbjGHCXM
— Kyrsten Sinema (@kyrstensinema) April 16, 2020
As Congress debates, hundreds of thousands of small business owners remain stranded. Many had already filed for loans, but have not yet been approved. Now they will wait in a congressionally imposed limbo.
One of those small business owners is Nicole Carter, who along with her husband runs an IT services company in Florida. Carter told the Free Beacon that she applied to three different lenders for a PPP loan, but that none had processed her application as of Wednesday night. That left her and her husband—sole employees of their business—in financial trouble.
"If there isn't additional funding, we are unsure what we will do," Carter said.
Josh Z., who declined to give a last name, works as a manager for a portfolio of companies focusing on essential services—mining, trucking, river and lake terminals, steel service center, and power generation. Like Carter, Josh sought funds from three different banks, but said the would-be lenders were "blindsided" by the process and simply lacked the resources to process his application.
The companies he works for, he said, have 719 employees and "without funding, up to 75 percent could be laid off."
Data show that these small business owners are not alone. A survey released Monday found that a four-month-long shutdown would see the permanent closure of up to half of businesses, including up to 65 percent of retailers, 70 percent of restaurants, and 55 percent of entertainment businesses.
The businesses that responded to the survey indicated that a program like the PPP would drastically reduce the number of individuals they needed to lay off. In its absence, however, even more Americans are likely to lose their jobs. Data released Thursday showed another 5.25 million unemployment claims, bringing the total over the past four weeks up to 22 million—effectively erasing all the jobs gained since the Great Recession.