The administrator of a key US small business lending program to support companies devastated by coronavirus shutdowns said Thursday it has run out of funds due to massive demand.
The Small Business Administration, which was tasked with managing the US$349 billion program, said on its website it was unable to accept new applications “based on available appropriations funding.”
The statement comes as lawmakers in Congress argue over the next round of stimulus measures following an unprecedented series of emergency initiatives to prop up the US economy.
The government reported Thursday that another 5.2 million US workers filed for unemployment benefits, taking the four-week total to 22 million, a staggering figure in a downturn that economists say presents the country with its most severe outlook since the Great Depression of the 1930s.
Other recent economic reports have shown plunging retail sales, lower manufacturing activity and a steep drop in homebuilding applications.
Treasury Secretary Steven Mnuchin and congressional Republicans have pressed to immediately add US$250 billion in funding for the program in a narrowly-tailored bill. Democratic leaders have signaled support for the program, but want to include additional money for hospitals, local and state governments.
“We are big believers in small businesses,” House Speaker Nancy Pelosi, the top Democrat in Congress, told reporters.
But she stressed her party also wants to “negotiate on how we could do more for hospitals, state and local government – that is police, fire, education, etc,” -and bluntly asked why Republican lawmakers were “ignoring” such critical needs. Negotiations involving Mnuchin were ongoing, Pelosi said, but signalled a resolution could take time.
“If we have an interim package, we may have that on the floor before the end of the month,” she said.
President Donald Trump joined congressional Republicans in accusing Democrats of “blocking” the US$250 billion injection.
“They are killing American small businesses. Stop playing politics Dems!” Trump tweeted.
’14 years worth of loans’
The initiative, the Paycheck Protection Program (PPP), provides loans to businesses with fewer than 500 employees to cover eight weeks of payroll or rent. The loans convert to grants if restaurants, shops and other businesses maintain their employees or rehire laid-off workers by June 30.
The scale of the program, launched less than two weeks ago, has proved challenging to the SBA, a normally sleepy government agency whose lending operation is typically a fraction of the PPP’s size.
“In less than 14 days, the SBA has processed more than 14 years (worth) of loans,” SBA Administrator Jovita Carranza said Wednesday on Twitter as she called for more congressional funding.
A spokeswoman said late Wednesday that the agency has already committed more than $300 billion of the original allocation to support some 1.4 million applicants.
There have been questions about whether the money is reaching the neediest businesses and about the utility of the program to New York City and other coronavirus-ravaged regions where rehiring staff by late June may not be realistic.
SBA figures show Texas, a large state but with only 400 coronavirus fatalities, had received US$21.7 billion in small business loans as of April 13, while New York, with 14,500 deaths, received US$11.7 billion.
Some prominent lenders, including JPMorgan Chase and Wells Fargo, said Thursday they would continue to process paperwork from small businesses in anticipation of additional funding from Washington.