The Small Business Administration has stopped processing Paycheck Protection Program loan applications after approving 1.3 million loans and hitting its $349 billion cap, CNBC is reporting.
“By law, the SBA will not be able to issue new loan approvals once the programs experience a lapse in appropriations,” a statement by Treasury Secretary Steve Mnuchin on Wednesday said. “We urge Congress to appropriate additional funds for the Paycheck Protection Program—a critical and overwhelmingly bipartisan program—at which point we will once again be able to process loan applications, issue loan numbers, and protect millions more paychecks.”
CNBC confirmed that the money had run out.
Negotiations were reportedly continuing between the House, Senate and Treasury Department. Democrats in Congress refused to allow a general extension of funding without approving additional money for other recovery programs as well, PBS.org reported.
Failure to resolve the funding issue could have broad implications for the nation’s economy. The program encourages businesses to keep workers employed by providing government-backed loans from banks to businesses. Businesses that meet certain criteria won’t need to pay the loans back.
“It won’t be long before we have data showing business bankruptcies rising at an alarming rate,” said a statement from the Main Street Alliance, a network of small business coalitions. “We are on the brink of economic catastrophe and Congress must act immediately to overhaul the troubled PPP to provide significantly more streamlined funding and faster for a longer timeline, and ensure that workers waiting in line for UI [unemployment insurance] are covered, including self employed and gig workers.”
Do you have experience trying to get a PPP loan or want to share your business survival tips? Please send your comments to SFBW Editor-in-Chief Kevin Gale at [email protected].
