A $349 billion loan program intended to help small businesses pay their employees through the COVID-19 crisis hit its cap in less than two weeks. While officials say they’re working hard to inject billions in additional funding, industry groups say additional protections are needed soon if companies are going to stay afloat.
The Paycheck Protection Program was passed last month as part of the CARES Act, Congress’ $2 trillion economic relief bill. It allows companies with fewer than 500 employees to apply for forgivable loans to cover payroll expenses through the end of June. On Thursday, though, the Treasury Department and Small Business Administration (SBA) said the program was out of money after issuing loans to 1.6 million businesses.
“The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding,” reads a message on the government agency’s site.
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According to the SBA, there are more than 30 million small businesses in the U.S., employing 58.9 million people — or nearly half of the U.S. workforce.
Democrats and Republicans are both seeking additional funding for the program, but negotiations have stalled amid disagreements over whether the bill should also include money for state and local governments, hospitals and food assistance.
On Friday, Senate Minority Leader Chuck Schumer explained to reporters why Democrats blocked an earlier version of the bill that didn’t include the additional categories of aid: “It’s vital we help small business, but if we don’t deal with the testing and health-care problems, if we don’t deal with local government problems, small business may have enough money to get back, although we’ve got to fix that program, but people won’t go out on the streets.”
He promised that talks would continue through the weekend, and on Sunday, Treasury Secretary Steven Mnuchin said the new “interim” spending bill would include about $350 billion in extra funding for the small-business program, $75 billion for hospitals and $25 billion for coronavirus testing, though a deal has yet to be reached.
With stores closed and revenues down dramatically across most of the retail industry, the National Retail Federation is calling on Congress to expand the PPP even further. The organization is pushing for an additional $600 billion for the program in order to fund loans through December 2020.
“It is clear that extended public health restrictions and a slow return to normal work, public gathering and travel patterns will result in small businesses having limited customers and revenue far beyond June 30,” wrote David French, NRF senior vice president of government relations, in a letter to House and Senate leaders. The organization also asked for more flexibility for businesses with closed locations to use loans for rent and utilities; currently, the 1% interest rate is forgiven if the funds go largely toward paying employees.