Paycheck Protection Program Has Depleted Funds
Kim Ciccarelli Kantor CFP®, CAP®
It was announced on Thursday, April 16th, 2020, that the Small Business Administration (SBA) Paycheck Protection Program (PPP), enacted by the CARES Act, had depleted the $349 billion allocated to the program and will not accept new loan applications at this time. Applications for the program were first released on April 3 and within 13 days funds were completely exhausted.
The $10 billion that was set aside for Economic Injury Disaster Loans (EIDL), a loan advance that can provide up to $10,000 in emergency economic relief to businesses currently experiencing economic difficulties, has also run out of available funds. The SBA stated that it is currently unable to accept any new applications for the PPP or EIDL programs based on available funding and that it is also unable to enroll new PPP lenders.
The Paycheck Protection Program was created through the CARES Act, the $2.2 trillion relief bill enacted by President Donald Trump to provide economic relief to businesses, families, and individuals financially affected by the COVID-19 pandemic. PPP loans issued by the SBA are authorized to provide small businesses with loans to pay eight weeks of salary, benefits, and other eligible costs. The loans will be forgiven if all employees are kept on the payroll till June 30th and the money is used for payroll, rent, mortgage interest, or utilities.
There is a possibility that lawmakers will approve an expansion to the program in the coming week, which could include $300 billion in additional funds for the program, however, details of this expansion are still being ironed out.* Small business owners who are waiting on this expansion may want to verify they are exploring their full range of financial options since it is unclear at this time if and when additional loans will be made available.
If you have any questions about this announcement or how it may impact your future financial plans, please feel free to reach out to your CAS advisor.
*As of Thursday, April 23, 2020, the Federal Government approved another round of $321 billion in funding.
Sources
Paycheck Protection Program. (3AD). Retrieved April 23, 2020, from Small Business Administration Website
Peasley, M. A. (n.d.). Paycheck Protection Program Funds Depleted and Economic Injury Disaster Loan Applications No Longer Accepted. Retrieved April 23, 2020, from Roetzel and Andress Law Website
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