Economy On the Hill

COVID-19 Small Business Loan Program Runs Out of Funds as Businesses Struggle

Funding for the Paycheck Protection Program, a new federal program part of the $2.2 trillion stimulus bill signed into law late March, is already running out of funding. With no viable proposals by lawmakers in the works as of yet, the risk of bankruptcies and additional millions of unemployed workers seems more and more plausible during this period of economic decline.

If funding for this new federal program runs out, the Small Business Administration, in turn, will have to stop approving applications. As of April 15th, over 1.4 million loans had been approved at a value of approximately $315 billion. So far, Congress and the Trump administration have failed to reach an agreement on increasing the federal funding of this program. This replenishment of funding is necessary to help keep millions of businesses afloat. The struggling loan program was one of the first measures introduced by Congress in the stimulus package, and has been riddled with problems since it first was enacted.

While some lawmakers have pushed to quickly infuse the program with cash to keep it going, others have firmly insisted that new restrictions must be implemented to ensure that money is going to minority-owned businesses and other companies which are disadvantaged in the lending market. Lawmakers in favor of these restrictions have also advocated for more money to go towards hospitals, food-stamp recipients (SNAP), and local and state governments for tax receipts. There has been no movement from lawmakers of either side of this debate. Small businesses will continue to suffer until an agreement is reached.

Sources: NY Times 04/15/2020; NY Times 04/03/2020