Lenders, small businesses and their financial and legal advisers have scrambled to keep pace with the almost daily amendments to the Small Business Administration’s Paycheck Protection Program rules first issued on April 1, 2020. New requirements were posted as recently as last Wednesday. Then, Thursday morning, only 13 days after the PPP was launched and very shortly after Congress expanded the SBA Economic Injury Disaster Loan program to include COVID-19-related losses and provide emergency grants of up to $10,000, the SBA reported that the PPP fund was exhausted. The EIDL fund soon followed.
The SBA-backed PPP, desperately needed by small businesses grappling with COVID-19’s squeeze on the nation’s commerce, was drafted with broad eligibility requirements intended to throw open the doors to small businesses previously closed to SBA programs. It did, and businesses raced to their banks to participate. More than 1.6 million PPP applications were approved since the launch, pledging $349 billion in largely forgivable loans to help struggling enterprises. It is likely, however, that the sprint favored the more established businesses that already had relationships with SBA-approved lenders and ready access to legal counsel to help them navigate the complex and rapidly unfolding programs. Without question, those businesses were in need. But smaller concerns unaccustomed to accessing SBA loan programs and without legal and financial advisers in place may not have been nimble enough to benefit from the rescue package.
On Thursday Congressional negotiations to replenish the PPP fund with an additional $250 billion stalled. It is thought that Congress will eventually supply more funding, but nothing is yet certain.