Business Loans

PPP Loans: What Happened and What to Do Now

Apr 16, 2020 • 3 min read
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      UPDATE: The PPP loan application period ended May 31, 2021. Learn about financing options available for small businesses today at Lendio.com

       
      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. 

      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. 

       

      While every effort is made to ensure the accuracy of information when a story is published, the coronavirus pandemic and Paycheck Protection Program (PPP) have caused details to change at a rapid pace. Additional guidance from the government may change or clarify certain aspects of the forgiveness process and could result in changes to the information contained in these pages. For the most up-to-date information, please visit the COVID-19 section of our website. For more information, you can call us at (855) 853-6346. Lendio is not responsible for and provides no warranty as to the accuracy of this content. Lendio does not provide legal, accounting or tax advice. The information and services Lendio provides should not be deemed a substitute for the advice of such professionals who can better address your specific concern and situation.
      About the author
      Mary Kate Miller

      Mary Kate Miller is a writer based in Chicago, IL. She specializes in covering finance (personal and business), investing, and real estate. Her mission in life is to give readers the confidence and the knowledge needed to grow their wealth by making financial topics more accessible. When she's not writing about topics like business loans, you can find her playing armchair financial advisor to the Real Housewives.

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