WASHINGTON–The Paycheck Protection Program needs some protection of its own, with the federal government indicating it was on track to deplete its $349-billion in funding by Wednesday night.
Members of Congress and the White House were reportedly in negotiations to secure more funds as businesses scramble to deal with the effects of the coronavirus.
According to the Treasury Department, the Paycheck Protection Program had approved more than 1.4 million loans valued at $315 billion as of late Wednesday. The program is just over a week old.
The fund needs about $10 billion to cover processing and fees, Senate Small Business Committee Chairman Marco Rubio (R-FL) said on Twitter, according to the Washington Post.
As CUToday.info reported earlier, both Democrats and Republicans have sought to add $250 billion to the PPP, but so far have been unable to do so due to disagreements. Democrats have sought to expand access to the loans as well as include more money for hospitals, food assistance and state and local governments. Republicans want to keep the bill focused on increasing small-business aid and defer other funding debates until the next, broader legislation is crafted, which is the so-called phase IV stimulus.
As CUToday.info has also reported, many credit unions have expressed frustration with the PPP as they sought more guidance. Earlier this week, as CUToday.info reported here, three CUSOs reported they had begun processing a significant number of loans as the process and systems showed improvements.
Another Program is Struggling
The PPP isn’t the only program encountering problems. The Economic Injury Disaster Loan program, or EIDL, which is administered by the SBA and is separate from Paycheck Protection Program has also become the subject of a political fight on Capitol Hill, according to the Washington Post.
The EIDL is an emergency loan program intended to get money swiftly into the hands of small businesses, “but it has all but collapsed under an unprecedented crush of applications and a shortage of funds, overwhelming agency officials and prompting urgent calls for action on Capitol Hill,” the Post reported.
In mid-March the SBA expanded the program to help entrepreneurs hurt by the coronavirus pandemic by offering low-interest loans up to $2 million.
Congress provided an additional $10 billion to the EIDL program as part of the CARES Act in order to offer grants of up to $10,000 to small businesses within three days of applying for a loan. The grants are intended to serve as a bridge for small businesses to cover rent and other expenses while they wait for the larger loans to be approved
But as the Post reported, demand for the EIDL loans and grants quickly overwhelmed the system, leaving many applicants without funds weeks later. The SBA ― which accepts disaster loan applications itself rather than outsourcing that work to financial institutions ― has reportedly received well more than three-million applications, and one SBA representative told the Post, “Sadly to say, we’re getting low on funds.”
Congress continues to discuss adding funds to the EIDL, as well.