The Paycheck Protection Program (PPP), a new loan initiative aimed at helping small businesses weather the economic fallout from the coronavirus response, has already run out of money, according to a statement from the Small Business Administration.
The Paycheck Protection Program has already run out of money
And Congress is at an impasse over how to keep on funding it.
Li Zhou is a former politics reporter at Vox, where she covers Congress and elections. Previously, she was a tech policy reporter at Politico and an editorial fellow at the Atlantic.
Lawmakers had allocated $349 billion to PPP as part of the $2 trillion stimulus bill that Congress passed in March, but these funds were ultimately far from sufficient to meet demand. As of this week, banks and lenders had processed more than 1.3 million loans, with as many as 700,000 small businesses and nonprofits still waiting on funding.
PPP is an entirely new program that was established to provide forgivable loans to small businesses as they grapple with social distancing measures and other restrictions that have forced many to temporarily shutter or reduce their services. The Economic Injury Disaster Loan (EIDL) program, which the stimulus also included $10 billion for, has also been rapidly depleted.
The shortages in funds aren’t the only issues that have plagued the small-business loans recently greenlit by the stimulus. The programs have dealt with tech delays, access problems, and loopholes that enable larger companies to reap key benefits.
Both Democratic and Republican lawmakers agree that more money needs to be approved for the PPP, but they’re currently at an impasse over whether a new funding package should include money for the EIDL, as well as states and hospitals.
Republicans, thus far, have been pushing the swift approval of $250 billion in stand-alone funding to replenish the PPP. Meanwhile, Democrats would like to pass a more ambitious interim spending package and are using the leverage they have in Congress to make that happen.
There’s a stalemate in Congress about how to pass new funding
The fight over new funding for the small-business program is founded on a central disagreement between Democrats and Republicans over how expansive stimulus programs need to be.
Republicans would like to focus narrowly on the PPP program and have called for Congress to unanimously approve this money so lawmakers don’t have to return physically to vote and further delay this funding.
“Millions of small businesses are in limbo because Democrats refused to put aside partisan politics and fund this bipartisan program,” Sen. Marco Rubio, chair of the upper chamber’s Small Business Committee, said in a statement. “I urge my colleagues to swiftly pass a clean funding bill for PPP.”
Democrats, however, would like to see Republicans allocate additional money to boost hospitals and states, which are already suffering severe shortfalls due to coronavirus-related costs and reduced revenues. They’d like to see $100 billion allocated to health care providers, $150 billion for states and cities, and more support for SNAP.
Democrats are also interested in making sure that part of the new $250 billion in small-business funding goes to the EIDL program, which provides forgivable grants. And they’d like to see guarantees that direct some of the funding for PPP to community-based lenders, which are more accessible to minority-owned and rural businesses that are less likely to have existing relationships with the larger banks.
This recent PPP development is set to put more pressure on Democrats as Republicans — including President Donald Trump — criticize their efforts to block a funding bill. Democratic leaders have signaled, however, that they aren’t planning to cave on such measures unless they receive some concessions from the GOP.
All of this is further complicated by the fact that most lawmakers are working remotely right now and aren’t able to vote, meaning any legislation would need to pass with strong unanimous support. Since lawmakers can’t vote remotely, legislation would have to be approved either via unanimous consent or a voice vote by those who are physically able to be on the Hill. In both cases, however, one lawmaker who opposes the process could try to block the bill from going through, so Congress needs to be in full agreement in order for anything to pass.
Because of the ongoing disagreement between the two parties, additional small business funding might not move forward until lawmakers are able to physically return to the Capitol in May.
In the meantime, thousands of small businesses are simply forced to wait.
