Less than a week after the SBA started funding the newly launched Paycheck Protection Program (PPP) loans, the $350 billion allocated for the program has been depleted. What happened? Why did the money run out so quickly? And what should we do now?
What We Knew About PPP Loans Going In
As soon as the CARES Act passed, there were warnings that the $350 billion in funding wouldn’t be enough. Some economists warned that we would need $1 trillion or more to provide financial support to every business that needed it.
We also knew that the PPP loans were being rolled out at an almost unprecedented speed. There has been a new development every week since the CARES Act passed, bringing us from legislation to applications opening and then loans funding. It is incredibly unfortunate that “depleting allocated funds” has also fallen in line with that weekly cadence.
How Were the PPP Loan Funds Used So Fast
The national average loan size for funded PPP loans is $216,000. Based on that average, loans went to a mere 1.6 million small businesses. That’s only 5% of the 30.2 million American small businesses.
Lenders that had prior approval to fund SBA loans were able to fund first, and they prioritized working with their existing clients. As a result, some of the hardest-hit businesses were left in the lurch.
What Can We Do Now?
The need for more funds is obvious. It seems to be more of a matter of “when and how much” Congress will increase funding for the PPP loan program than “if” they will. To help put pressure on Congress, you can add your voice to the calls for increased funding.
- Sign the petition
- Call your Senator or Representative (using this script)
- Use ResistBot to send a letter to your Senator or Representative by texting “Resist” to 50409
Relief Resources for Small Businesses
We understand that every day counts, and this development is an enormous blow for small businesses relying on the support promised by the PPP program. There are a number of state, local, and corporate-sponsored relief resources that may be able to help while we wait.