The Small Business Administration announced on Tuesday that the Paycheck Protection Program has run out of money for most borrowers before its estimated date May 31st. The program plans on only accepting a few applications from Community Financial Institutions which is for minority borrowers. Previously, $8 billion was set aside to serve the minority businesses.
Don’t be afraid if your application is still in outstanding. The SBA will continue to fund outstanding approved PPP applications from other lenders, but they won’t accept new applications.
The funds running out came weeks after the PPP announced to be extending through the end of May, so borrowers had more time to apply, but the funds were not expected to end so soon.
How the Paycheck Protection Program Started
The Paycheck Protection Program was established in March 2020 as part of the CARES Act due to so many businesses needing help because of the Coronavirus pandemic. The program has given more than $780 billion in forgivable loans to more than 10.7 million borrowers.
In 2021, Congress gave about $292 billion to a new round of the program which allowed businesses to apply for a second round. Also, the Biden administration made the qualifications less strict, changed the loan calculation formula for sole proprietors, and gave small businesses a priority window.
Making the qualifications less strict helped borrowers who had been denied forgivable funding loans. This was due to banks and borrowers calling on the SBA and Congress to make the rules better, so it can help more businesses while the economy opens back up.
What Can Small Businesses Do Now?
If you missed out on the Paycheck Protection Program, there are other relief programs that are available through the SBA that can help small businesses. The Restaurant Revitalization Fund started on May 3rd. The program is part of the $1.9 trillion stimulus package and allocated $28.6 billion in funding. The SBA will only approve applications from small businesses that are owned by women, veterans, or socially and economically disadvantaged people in the first 21 days.
Some are worried that the funding won’t be enough to help all businesses that need support during these difficult times. According to a White House report, the program received 186,2000 businesses that applied for funding in the first two days.
The SBA reopened applications for the Shuttered Venue Operators Grand Program in April, which has $16 billion in funding for theater owners and other venue operators that have closed during the pandemic. The SBA will approve applications, starting with the ones that lost the most revenue first.
With the Payment Protection Program out of money, these programs are essential for small businesses now.
First Union Lending is here to help. If you need additional capital for your business, we have the resources for you. With short-term loans and SBA loans among other products, we get you the cash you need quickly. Call today!