Alert / Retirement, Risk Management, Employee Benefits
Paycheck Protection Program runs out of money after just two weeks

April 16, 2020

After just two weeks of operation, the $350 billion Paycheck Protection Program (PPP) has run out of funds. The lending program was established as a central piece of Coronavirus Aid, Relief, and Economic Stimulus (CARES) Act to offer lifelines to small businesses with significant revenue loss due to the impacts of the coronavirus pandemic. For background details about the program, view our prior alert.

With the funds for the program maxed out, it has stopped accepting applications. The PPP was backed by the Small Business Administration (SBA), which states on its website that the agency “is unable to accept new applications at this time … based on available appropriations funding.”

From the outset, the PPP was overwhelmed with demand. The SBA said as of Thursday morning, just 13 days since the program launched April 3, it had received more than 1,637,000 loan applications requesting more than $339 billion in loans. It is unclear how much of the funding has actually been distributed, as that information has not been released and the legislation did not compel the agency to make public information about who the fund recipients are.

With more than 30 million small businesses in the U.S., it appears funds from the PPP will bolster only a small fraction of the potential need without updates to the program or additional relief from the government.

Lawmakers disagree on how to update the program

Republicans and Democrats have made it clear more action is needed to address the negative economic impacts of the coronavirus outbreak and related actions to control the spread. However, the two parties are divided on what those actions should be.

Democrats have said they will not agree to more funding for small businesses until their demands have been met for additional funding for healthcare facilities, state and local governments, and food stamp recipients. Republicans want to move forward with funding small businesses first, then address additional funding and economic relief needs. Republicans point to the fact that unlike the PPP, funds for the other programs remain unallocated. Attempts by both parties to pass their own funding were blocked by the opposing party late last week.

Leaders in both parties continue to work together to hammer out a deal, but It is unclear which side, if either, will blink first.  

Lockton comment: Agreement among party leaders is necessary for the bill to pass, but it might not be enough. Nearly all members of Congress remain in their states and districts, without a mechanism for remote voting. Even if an agreement can be reached by party leaders, any legislation will require members to return to Washington, D.C., or unanimously agree. Any one member could block legislation and eliminate the possibility of unanimous consent, as one member attempted to do during the House vote on the CARES Act. In that case, Congress would need to vote in person, despite warnings to not travel or participate in large gatherings. Congress is next scheduled to meet in person in Washington, D.C., beginning May 4, but even that date remains in doubt. 

Other options?

For now, employers who were unable to obtain a PPP loan might consider applying for a Main Street loan when the program opens. The  Economic Injury Disaster Loan through the SBA has also stopped accepting applications. The Main Street loan is not as advantageous as a PPP loan, as it is not forgivable and has less favorable terms. Interested employers are encouraged to continue speaking with their lenders. 


Not legal advice: Nothing in this Alert should be construed as legal advice. Lockton may not be considered your legal counsel, and communications with Lockton's Government Relations group are not privileged under the attorney-client privilege.

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