The federal government’s Paycheck Protection Program closed to new applications Friday as funding was on track to be exhausted.
The closure marked the end of a $961 billion emergency effort that helped millions of small businesses survive the pandemic but was dogged by fraud claims and criticism that it didn’t reach the neediest businesses.
The program had been scheduled to end Memorial Day, but the Small Business Administration on Friday said in a notice to lenders that “due to the high volume of originations today, the portal will be closing for new originations” that day.
The SBA as of May 23 had approved 11.6 million PPP loans totaling roughly $796 billion across the program’s first round, from April to August last year, and its second round, which began in January. Banks and other lenders issued the loans, which the SBA guaranteed.
After the program’s general funding was exhausted in May, funds remained only for certain community lenders. The SBA said Friday that these lenders submitted 125,000 loan requests in the preceding 24 hours.
The agency will have another month to process loan applications that were already submitted. The SBA also has thousands of pending requests for loan forgiveness. Millions more will likely follow.
Created by the $2 trillion CARES Act that became law in March 2020, the PPP offered coronavirus aid in the form of loans that could be forgiven provided recipients used the funds to retain workers and on other allowable expenses.
Researchers at the Massachusetts Institute of Technology last July estimated the program had increased employment in the U.S. by about 2.3 million jobs through the first week of June 2020. At that time, the SBA reported that it had approved about 4.5 million loans totaling $511 billion.
Source: Wall Street Journal