PPP Program Still Has $125B Left

President Donald Trump and Congress wasted no time refilling the Paycheck Protection Program’s (PPP) coffers after the popular loan initiative ran out of cash in 13 days. But at the close of business on Thursday (May 7), the Small Business Administration (SBA) reported that more than 40 percent of the second round of PPP funding is still available.

The $2.2 trillion CARES Act passed by Congress in March included $310 billion in PPP loans to keep businesses in the black during the coronavirus pandemic. Launched on April 3, the money was exhausted in less than two weeks. Small businesses cried foul and complained they were shut out as big firms, publicly traded companies and nationwide franchises got most of the funds.

A second round of funding was approved last month and $349 billion was ready to go on April 27, designated for smaller firms. The loans are forgivable if 75 percent of the proceeds are spent on salaries and certain other expenses. 

At the time, U.S. Treasury Department officials, banks and business trade groups feared the new cash would also be depleted in short order, but that hasn’t been the case. Nearly two weeks after the latest round of forgivable loans was released, only about 60 percent has been spoken for. So far, 2.5 million PPP loans totaling $185 billion have been approved, the SBA told PYMNTS. That leaves $125 billion up for grabs. 

A PPP lender from one of the nation’s largest banks who spoke on the condition of anonymity said it appears the vast majority of businesses who needed a loan got one when the program was first launched.

“We saw a surge during the first round of funding, but we are not seeing a huge influx this time,” the executive said. “My sense is the initial outlay of the second round stemmed from applications that were already in the pipeline when the first round ran out of money.” 

The other factor that has made more cash available for a longer period this time around is the size of the loans. “Our average loan size the first time was $206,000,” the lender said. “But now we’re seeing loans averaging about $79,000.”

In a PYMNTS report on Friday (May 8), Ingo Money CEO Drew Edwards, Planters First Bancorp CEO Dan Speight and K&L Gates Partner Judie Rinearson had some suggestions to make PPP more palatable for SMBs. First, they advised replacing the nebulous categories around the ability to repay and removing the threat of criminal investigation or prosecution. If the goal is to ensure that only SMBs facing extinction get the loan, they recommend eliminating forgiveness for larger firms with more liquidity.