(NEW YORK) — As thousands of small business owners across the country scramble to stay afloat, the popular federal government-backed loan program meant to save those companies is poised to run out of money as early as Wednesday night, this according two Republican officials close to the matter.
The roughly $350 billion Paycheck Protection Program (PPP), which experienced a very rough rollout, is designed to cover eight weeks of a business’ payroll expenses, so the company can retain its workers or hire back those it may have already furloughed, and the loans are forgivable provided that 75% of the total amount borrowed is used for payroll expenses.
“It’s been so good, it’s almost depleted, but we can’t get the Democrats to approve it,” President Donald Trump warned in a Rose Garden press conference Wednesday night.
The Small Business Administration, which is administering the program, indicated late Wednesday that there was about $26 billion left after 1,525,000 applications had been approved, totaling more than $324 billion, from more than 4,900 lending institutions.
The administration has requested another $250 billion for the program, but Democrats have been in a standoff with Republicans as they seek to wall off a portion of the funding for lenders that service minority-owned businesses, and push for another $250 billion for hard-hit hospitals on the frontlines of the pandemic, states and local governments suffering from revenue loss, and a 15 percent increase in food stamps.
Senate Minority Leader Chuck Schumer, D-N.Y., told reporters earlier on Wednesday that he had just spoken with Treasury Secretary Steven Mnuchin, who has been negotiating with Democratic leaders on a compromise.
“We see no reason why we cant come to agreement,” Schumer said in a conference call, though he did not elaborate on when that deal might be reached. “We need to reprogram some of the parts of the program that are out of money. … We think there is just as much need for hospitals, health care workers, state and local workers. They need help immediately or we’re going to have millions, millions out of work.”
Aides to leaders on both sides of the aisle continued to express hope that a deal would be reached soon. The Senate is scheduled to come into session briefly on Thursday and the House on Friday at which time any business that has the unanimous support of members could be approved. It is possible a deal would be supported this week in those sessions.
“It is inexcusable that the Paycheck Protection Program will grind to a halt tonight,” Senate Small Business Committee Chairman Marco Rubio said in a statement Wednesday. “In less than two weeks, the PPP helped over 1 million small businesses receive forgivable loans. Now, millions of small businesses are in limbo because Democrats refused to put aside partisan politics and fund this bipartisan program. I urge my colleagues to swiftly pass a clean funding bill for PPP tomorrow.”
Meanwhile, it remains to be seen what happens to lenders who have borrowers in the pipeline. The head of the Consumer Bankers Association, an industry trade group closely monitoring PPP told reporters that his organization was pushing SBA for guidance on what happens next, noting that much was at stake.
“We think any hour now, we’ll reach the $345 billion number (for PPP) — which is the actual number — and we know now there are 700,000 applications that our banks have and are going through the underwriting process and haven’t been sent to SBA yet. We think at the end of the day, we’re going to need upwards of $1 trillion to satisfy the demand of the nation’s small businesses,” Consumer Bankers Association President and CEO Richard Hunt said.
In a statement Wednesday, Mnuchin and SBA Administrator Jovita Carranza urged Congress to appropriate additional money because, “by law, the SBA will not be able to issue new loan approvals once the programs experience a lapse in appropriations.”
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