Paycheck Protection Program Runs Out of Money – What Happens Now?

The US Small Business Administration (SBA) announced today that they are unable to accept any new applications for the Paycheck Protection Program (PPP) or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances). They have also stopped enrolling new lenders. This comes just 13 days after its April 3 launch.  The program is on a first come first served basis, so there won’t be a queue of applicants beyond what has been appropriated to this point.

According to a report by Bloomberg, the SBA announced that more than 1.4 million applications had been approved, representing about $338 billion of the $349 billion total funds available to small businesses. That figure represents the dollar amount of the loans that have been approved for disbursement, not what has reached businesses in need. Crowdsourced database COVID Loan Tracker estimates that only about 5% of small businesses that have applied for a lone have received one.

So, what happens next?

An article in Slate, suggests that the Trump administration is now in discussions with Democrats about replenishing the funds. The expectation is that they will work to reach a decision quickly, so small businesses aren’t ‘left in the lurch.’

The negotiation over how to proceed may be fraught with conflict over what other parts of economic relief funding need to be topped off before Democrats agree to another round of PPP funding.  The Republicans want to keep any top-up of the PPP exclusive to small businesses.

Our hope is that negotiations don’t get bogged down in political wrangling. There certainly seems to be pressure coming from all sides to get this done. With an agreement hopefully hours (but more likely days) away, it’s too early to tell what the practical next steps are for applying for help. Watch out for updates here as soon as more information is available.

If you have any questions in the meantime, contact Allan RooneyElannie DamianosTimothy Davis, or Abbey Docherty or call 212 545 8022.

 

This Article Is One Of A Series Intended To De-Mystify Common Legal Issues For The Non-Lawyer And Entrepreneur Audience – They Are Designed To Foster Discussion And Is By No Means Exhaustive. These Materials Are For Informational Purposes Only. Nothing Herein Is Intended Nor Should Be Regarded As Legal Advice. The Distribution Of This Article To Any Person Does Not Establish An Attorney-Client Relationship With Our Firm. Rooney Nimmo Assumes No Liability In Connection With The Use Of This Publication. This Bulletin Is Considered Attorney Advertising Under The Applicable Rules Of New York State. Rooney Nimmo UK Is Regulated By The Law Society Of Scotland And Rooney Nimmo US By The New York Rules Of Professional Conduct. All Attorneys And Solicitors Listed In This Firm Stipulate Their Jurisdictional Limitations. Rooney Nimmo In The USA Is A Law Firm Registered As A New York State Professional Corporation.

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