WASHINGTON–Some early data around the number of applications and average loan size being approved as part of the Paycheck Protection Program (PPP) have begun to emerge, but many participating lenders and businesses say much of the funding has yet to actually begin flowing.
The $349-billion PPP is officially one-week old today. The program offers loans up to $10 million to companies with up to 500 employers to cover payroll costs, and as long as certain requirements are met the loans are forgiven by the federal government.
Vice President Mike Pence earlier this week said $71 billion has been “disbursed” through the Small Business Administration, which is administering the program, but, as CUToday.info reported earlier, many lenders have complained of “bottlenecks” in getting applications processed and funds into the hands of borrowers.
The Early Reports
CBS MarketWatch reported it had spoken with numerous small business owners in urgent need of funds to pay workers, landlords, suppliers and other expenses who are uncertain over the status of those funds.
“The nation's biggest banks say they've received hundreds of thousands of applications for PPP loans,” CBS MarketWatch said. “But none of the major banks has released numbers on actual loans.”
According to numbers released by Bank of America, the average PPP loan that small business borrowers are seeking is nearly $170,000, which as of Tuesday had processed some 212,000 applications seeking a total of $36 billion.
“Based on that large sample from one bank, the vice president's tweet suggests that just over 420,000 small businesses have received PPP loans,” CBS MarketWatch reported.
The SBA told the news outlet it is not tracking the amount of money that banks have loaned under the program, saying only that it has processed more than 100,000 approved loans.
“A source close to the National Federation of Independent Business, a small business advocacy group, said the organization has no evidence that any of its hundreds of thousands of members have received funds,” CBS MarketWatch reported. “The source has heard anecdotally that businesses have yet to receive the money despite being approved for loans.”
According to the report, Ready Capital, one of the nation's largest lenders to small businesses, said it has processed 5,000 applications for PPP loans, but lenders at the firm have started calling the federal loans ‘groans,’ in part because they can be forgiven like grants, but also because of the difficultly of the process.
CUNA, NAFCU and the Defense Credit Union Council have all sent letters to various regulators and the SBA calling for changes to make the lending process easier.
New Legislation Hits Snag
Meanwhile, plans to provide additional funding for previously passed legislation to support the economy has hit a snag, according to the New York Times.
As CUToday.info reported earlier, the Trump administration has asked Congress for $250 billion in spending to replenish a new loan program for distressed small businesses, but Republicans and Democrats are clashing over what it should include.
According to the Times, Democrats want to double the size of the new emergency relief bill by adding $100 billion for hospitals and $150 billion for state and local governments, which are facing enormous shortfalls as the outbreak drives their expenses up and their tax collections down.
But Republicans argued that the small business program had a more urgent need for funds, and that additional demands for aid could be addressed in future legislation, the Times added.
Europeans Unveil Package
Overseas, following the U.S. lead, finance ministers with the European Union have agreed to the outlines of a loan package worth more than half a trillion euros to help the bloc’s nations relieve the severe economic blow from the pandemic.
The measures, which must be approved by the bloc’s leaders, could total up to €540 billion, or $590 billion, a show of solidarity as the economic and health crisis brought on by the virus strains bonds among the member countries, the Times noted.