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The Small Business Administration says that, without an emergency influx of cash, the Paycheck Protection Program, a low-and forgivable-interest loan system designed to help small businesses hurt by coronavirus-related lockdowns, will run out of cash by close of business on Wednesday.
The Paycheck Protection Program (PPP), passed as part of the third coronavirus relief package, the CARES act, is a fund of $349 billion, designed to buoy struggling businesses with fewer than 500 employees. Business that apply for PPP loans can apply later to have those same loans forgiven if they use the money to keep their employees on the payroll, pay rent, buy office supplies, or, simply, keep their doors open to commerce.
Freelancers and other independent workers who own their own businesses are also eligible to apply for the loans.
But banks like Wells Fargo told the Treasury Department late last week that applications were far outpacing availability. By last Friday, Forbes reports, financial institutions “had approved 880,000 applications for a total of $217 billion…That equals roughly 62% of allocated dollars.”
Forbes says that nearly a quarter million additional applications have been filed just this week.
On Wednesday, CNBC says, the Small Business Administration warned that the money could be gone by close of business on Wednesday afternoon.
[T]he first-come, first-serve Payroll Protection Program of $349 billion in aid may be nearing a ceiling for loan commitments, with more than 1.3 million loans given approval at a value of more than $296 billion through Wednesday afternoon, according to the Small Business Administration,” CNBC reports. “The program could reach its funding limit by the end of Wendnesday, according to a source familiar with the matter.”
Democrats, lead by Speaker of the House Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) shot down Senate Majority Leader Mitch McConnell’s (R-KY) plan to shore up the struggling fund by injecting an additional $250 billion into the program, forcing McConnell to negotiate with Democrats who want the emergency money contingent on greater payouts to hospitals and state and local governments.
McConnell introduced the emergency legislation last week, hoping the need was so evident that the $250 billion aid bill could pass on unanimous consent. But Pelosi and Schumer killed the bill, with Pelosi leading the way and even going so far as to tell her weekly press conference that there was “no data” to support the idea that the Paycheck Protection Program was in quickly running out of cash.
On Wednesday morning, in an appearance on MSNBC, Pelosi “congratulated” Senate Democrats for standing firm against McConnell’s pleas.
Instead, Democrats want McConnell to acquiesce to jumps in funding for several entities that received billions under the CARES act, including health care systems, and to demands to reconfigure the PPP system so that minority and female entrepreneurs are given priority in lending. Republicans argue that putting further, identity based restrictions on much needed small business loans ensures they will be more complicated to administer.
Instead, Republicans are urging Democrats to include their plans for additional funding in the draft of the fourth coronavirus relief package, which Pelosi and others are compiling while Congress is in recess.