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The $350 Billion Small Business Loan Program Is Officially Out Of Money. Lawmakers Can’t Agree On What Happens Next.

TOPLINE The emergency small business loan program that is a cornerstone of the $2 trillion CARES Act has now exhausted its $350 billion in funding; as millions of American small business struggle to cope with the economic slowdown caused by the coronavirus, congressional Democrats and Republicans have been unable to agree on a way to allocate more funds to the program.

KEY FACTS

On Thursday morning, the Small Business Administration said on its website that it is “unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time.”

The PPP allocates $349 billion for loans to small businesses that are struggling because of the coronavirus.

Treasury Secretary Steven Mnuchin and Democratic lawmakers will meet on Thursday to try to come to an agreement on a package that will immediately replenish the program’s funds, CNN reports.

Republicans lawmakers led by Senate Majority Leader Mitch McConnell want to quickly approve an additional $250 billion for the program and save other provisions for future relief legislation.

Democrats, led by Senate Minority Leader Chuck Schumer and House Speaker Nancy Pelosi, are pushing for more changes to the program that would expand funding to hospitals and state and local governments and allow more people (including those without an existing lending relationship with a bank) to be eligible for the emergency aid.

Big numbers

According to data released by the SBA, the average PPP loan size is about $240,000. The construction industry has seen the most loan money so far, followed by the professional, scientific, and technical services industries. More than 1 million loans have been approved.

Crucial quote

“The SBA has processed more than 14 years’ worth of loans in less than 14 days,” Treasury Secretary Mnuchin and U.S. Small Business Administration Administrator Jovita Carranza said in a joint statement on Wednesday. “We urge Congress to appropriate additional funds for the Paycheck Protection Program—a critical and overwhelmingly bipartisan program—at which point we will once again be able to process loan applications, issue loan numbers, and protect millions more paychecks,” they continued.

KEY BACKGROUND

Under the Paycheck Protection Program, companies and nonprofits with fewer than 500 workers can apply for loans of up to $10 million at 1% interest to so they can cover two months of payroll and overhead expenses. If the borrower retains workers and doesn’t cut their wages, the government will forgive most or all of the loan and repay the bank lenders. The launch of the program two weeks ago was chaotic: banks said guidance from the federal government was too slow to come (lenders were still waiting on information about the program in the final hours leading up to its launch) and confusing once it finally arrived. Banks have reported overwhelming demand from small businesses seeking financing; on Tuesday, JPMorgan JPM  said it has already seen more than 300,000 applications worth $37 billion.

This is a developing story. Please check back for updates.

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