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Barely a week after President Joe Biden signed the Paycheck Protection Program (PPP) extension into law, the SBA has announced that funding is becoming low, causing a potential cash crunch for the program that has been seen as a life line to the smallest businesses.  The SBA warns that funds for the PPP, which offers forgivable loans to small businesses, will likely be fully depleted later this month, well before the May 31 deadline for firms to request aid.

Some advocacy groups are warning that the funding lapse could leave thousands of small businesses on the sidelines, and urging Congress to approve billions more, particularly to help those that Biden promised to support with more generous loan terms implemented last month. However, one of the problems is Congress has been unable to obtain data on how many jobs the program has saved, or the extent to which loans have reached businesses owned by people of color and women. Also, it’s not the first time the program has run out of money, sending lawmakers scrambling to allocate more.

$960 billion was appropriated for PPP, and the program has given out more than $746 billion in forgivable loans to 9 million borrowers since last April. Funding discussions could prove more difficult this time around, as the U.S. Economy shows signs of rapid improvement, and the country begins to open up.

Lawmakers knew about the shortage prior to reaching agreement on an extension of the program. The SBA first disclosed the potential funding lapse late last month, when an official running the PPP told the Senate Small Business Committee that money available for loans would likely run out by mid- to late-April

The funding issue also creates complications for other changes lawmakers had been planning to make to the program. Particularly, allowing self-employed business owners to retroactively increase the size of their existing PPP loans if they received them before Biden changed the rules last month. Also, banks and other lenders responsible for distributing PPP funds on behalf of the government are wondering whether the issue will force them to consider whether to stop taking applications early, or to take applications right up until funds are exhausted, with the hope lawmakers replenish the program.

We’ve helped a multitude of businesses qualify for, and obtain a PPP Loan during the first round of funding throughout 2020, and during this second round of 2021.  Whether you’d like to attempt to qualify for a first round “draw”, or need assistance with documenting the qualifications for a second round “draw”, we are here to assist you.  Feel free to contact us with any questions you may have about the PPP.