$350Billion Dollars in Funding Depleted
The Paycheck Protection Program—part of the multi-trillion dollar CARES Federal Stimulus package meant to offset the massive economic slowdown associated with the COVID-19 pandemic—is running into challenges as it tries to actually deliver the promised funding.
“The SBA is currently 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,” – Small Business Administration announced Thursday April 16th.
Banks are overwhelmed by applications. Wells Fargo met its $10 billion lending limit three days into the program, most banks, including Chase and Bank of America have restricted applications to existing customers and Citibank took an extra week to ready itself before allowing any applications at all. As of today, Capital One has still not accepted application sand the first round of $350 Billion dollars is already depleted.
Many leaders are looking to other resources, such as the fintech sector. Fintech firms such as Square and PayPal, could “substantially increase the ease & availability of #PPPloans for #smallbusiness.” per Sen. Marco Rubio.
PayPal and Intuit have announced that they have been approved by the Small Business Administration to participate as some of the SBA PPP’s first nonbank lenders. PayPal has already begun disbursing loans to borrowers. PayPal recently told Fortune that “there is no cap on how much money it is willing to loan” to its 10 million merchants.
In the last two weeks, online lending platform OnDeck and Square Capital have also been approved to provide PPP loans to small businesses. And Kabbage, Fundera, and Lendio are throwing their hats in the ring to provide funding.
Everything is on hold at the moment, however, as the SBA has reached the limit of the allotted $350 Billion. The Main Street Loan program has $2.3 Trillion available to larger businesses able to take on debt of $1M – $150M, perhaps some of those funds will be redirected to the SBA. Congress is in session today to determine what money can be added to the SBA’s funding pool as we look out at least 4 weeks to a full reopening of the economy. The House is expected to be in on Friday, otherwise any movement on additional funds will have to wait until next week.