A $349 billion coronavirus loan program for small businesses has run out of money less than two weeks after it was launched, the U.S. Small Business Administration said April 16.
The Paycheck Protection Program, part of the Coronavirus Aid, Relief and Economic Security Act passed by Congress in late March, is aimed at helping businesses meet payroll. As long as they keep their employees---or rehire those laid off---the loan amount covering eight weeks of paychecks can be forgiven.
Wisconsin ranks 10th in the nation in both approved PPP loans, 31,702, and approved dollars, nearly $7.3 billion as of April 13, according to the SBA that’s made the federal program available to businesses with fewer than 500 employees.
Nationwide, 70% of small businesses surveyed by the National Federation of Independent Businesses said they at least tried to apply for PPP money. However, many applications could not be processed because of overwhelming demand, and now the initial round of funding has dried up.
On its website, the SBA now says the agency "is unable to accept new applications ... based on available appropriations funding."
The Treasury Department says by law, it will not be able to issue new PPP loan approvals due to the lapse, putting a pause on the program that's become a lifeline for millions of businesses.
The loans have been dished out on a first-come, first-served basis. As of the morning of April 16, the SBA said it had approved roughly 1.6 million applications for more than $339 billion in loans.
“The money running out has been a big fear that drove a lot of people to apply, I think, prematurely,” said Rose Oswald Poels, president and CEO of the Wisconsin Bankers Association.
“There was this understanding that the government was going to help any business with eight weeks of payroll. But when you start working through the details, you have to be operating right now with a full, normal payroll … and with the governor’s shelter-at-home order in Wisconsin, it’s effectively closed businesses like bars and hair salons that don’t have a payroll right now," Poels said.