WASHINGTON–The Paycheck Protection Program is out of money. The $349-billion program managed by the Small Business Administration and designed to get money to small businesses to support payroll and other costs, has exhausted its funding in less than two weeks after the program became available. The SBA said at least 1.6 million businesses had been approved for loans through the program, but the money went on a first-come, first-served basis.
Negotiations have broken down on Capitol Hill to provide additional funding. Both CU trade groups have called on Congress to replenish the fund.
The Senate met for a pro forma session on Thursday at which a deal needed to be reached before there would be any opportunity to replenish funds this week. Any deal in the Senate requires unanimous consent. Democrats and the Treasury Department were also in negotiations.
Late Thursday Senate Majority Leader Mitch McConnell (R-KY) tweeted, "Republicans tried to pass more money for Americans' paychecks last week. Democrats blocked it. Speaker Pelosi said she saw 'no data as to why we need it.' She said 'we have time to negotiate.' Democrats did nothing and now the program has shut down."
Senate Minority Leader Chuck Schumer (R-NY) responded in a tweet, "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 and pop shops and minority businesses are shut out, bigger banks are loaning to fav customers."
In a notice posted on its website, the SBA said, "The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time."
As CUToday.info has repeatedly reported, credit unions and other financial institutions have struggled with the Paycheck Protection Program since its inception, although during a webinar hosted by NACUSO three CUSOs last week said the process had improved and they were processing loans. The shutdown leads an untold number of applications in the pipeline in various stages. The Consumer Bankers Association said its member banks had 700,000 applications in the underwriting process that had yet to be sent to SBA.
As of Thursday morning at 6:30 a.m., $338 billion in loans had been approved, an SBA official told CNN. By 10:00 a.m., the SBA posted the update on its website. The SBA said it would need the remaining $10 billion to pay fees it agreed to give to lenders in the program.
The SBA further stated it would be “unable to maintain a queue for PPP applications."
NAFCU Response
In response, NAFCU President and CEO Dan Berger issued a statement, "As millions of small businesses and communities across the country confront a public health crisis caused by the coronavirus outbreak, policymakers must make sure it does not snowball into a full-fledged economic crisis too. With the SBA’s Payment Protection Program running out of funds after two short weeks, Congress must act to replenish the fund to ensure small businesses are able to keep their lights on and their employees paid during this uncertain economic time.
“Today, many credit unions have a large number of pending loan applications from small business owners looking for emergency financial assistance. With credit unions heavily engaged in serving underserved communities, which have been hit the hardest during this economic downturn, it is imperative policymakers set aside a portion of additional funding for credit unions. Credit unions have a strong track record and reputation for always putting its members first, and they stand ready to help.”
CUNA Response
In response, CUNA CEO Jim Nussle said, “Credit unions have been instrumental in getting these needed funds to small businesses around the country over the past few weeks, and it’s clear that these funds are providing a needed lifeline to impacted businesses,” said CUNA President/CEO Jim Nussle. “We urge Congress to come together on a deal to add additional funds, as it’s clear that as the effects of the pandemic continue, more businesses will find themselves impacted.”