A PAYCHECK PROTECTION program designed to help keep Americans employed in the wake of the ongoing coronavirus pandemic ran out of money on Thursday, as partisan differences have held up the allocation of additional funds to help America's small businesses stay afloat.
The Small Business Administration on Monday issued a statement on its website indicating that it "is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding." In less than two weeks, the $349 billion initially allocated to the program has been exhausted.
"We need to extend that support so we can protect workers and ensure our economy can rebound quickly once restrictions are lifted," Barry Melancon, president and CEO of the American Institute of CPAs, said in a statement on Thursday morning.
The program was designed to backstop banks and lenders granting loans to small businesses while their operations are locked down by state-mandated nonessential business closures. Provided any loans awarded to such firms go toward supporting worker salaries and keeping employees on the payroll – with some exceptions – some or all of those loans would be forgiven through the SBA.
But the initial $349 billion was never expected to be enough to provide long-term and meaningful support to small businesses across the country that have either shut down or drastically altered their business models in the wake of the coronavirus outbreak. Last week and during the three weeks prior, roughly 22 million Americans filed initial unemployment claims. That's roughly equivalent to all of the jobs that the country gained during its historic economic expansion after the Great Recession, erasing progress built between late 2010 and February 2020.
President Donald Trump's administration has been ramping up pressure in recent days to reopen at least portions of the domestic economy from lockdown measures implemented to prevent the spread of the coronavirus. As of Thursday morning, more than 639,000 Americans are confirmed to have been infected with the disease. More than 30,000 have died.
Several governors are now considering plans to partially lift lockdown measures in their states in the coming weeks – though many are expected to do so only gradually to prevent a spike in infection counts. Widespread social distancing measures are expected to remain in place throughout much of the country for at least the next several weeks.
Lawmakers on both sides of the political aisle have recognized the need to allocate further funds to the paycheck protection program, but progress has been stalled by differences over how the federal dollars should be spent. Senate Majority Leader Mitch McConnell of Kentucky has been pushing for an infusion of more than $250 billion into the program, blaming Democrats for slow progress. But Democratic lawmakers have blocked that approach, instead calling for a $500 billion package that would also funnel additional money to hospitals and state and local governments.
Discussions are ongoing between Republicans, Democrats and Treasury Secretary Steven Mnuchin. But business owners and economists warn that time is a critical factor in getting funding to small businesses across the country.
"Just yesterday, we released new data that 90% of small businesses have been impacted by COVID-19 with a large percentage reporting a severely negative impact," John Arensmeyer, founder and CEO of the Small Business Majority advocacy organization, said in a statement on Wednesday. "While it is clear that PPP is not a long-term nor an efficient solution, Congress must immediately add robust funding to keep it solvent, and not delay any further in providing direct cash grant assistance to the smallest, most vulnerable businesses."