SMBs Scramble For Cash As PPP Runs Dry

As lawmakers battle over how the next round of bailout money for small businesses should be spent, the president and CEO of Atlanta’s Federal Reserve Bank said up to $500 billion a month may be needed, according to a Reuters report.

Raphael Bostic said data from his staff’s analysis suggested how short the Small Business Administration (SBA) Paycheck Protection Program (PPP) has fallen.

“Using that as a benchmark might give us some guidance. … It would not be good to lose them,” Bostic said of businesses with less than 500 employees, according to Reuters. “It is my sense that there are lots of businesses that may have needed this support and did not get it, and we need to make sure they get whatever support.”

Bostic’s remarks came in a conference call with reporters on Thursday (April 16). At the same time, the SBA’s bailout has exhausted its $349 billion fund to keep small and medium-sized businesses (SMBs) afloat amid the coronavirus pandemic that has closed down much of the nation. The PPP loans are part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress last month.

SBA Regional Administrator Ashley Bell said many of the most fragile mom-and-pop businesses were unable to secure a loan before the money ran out, according to a separate Reuters report.

“We know exactly where we need to focus after this,” she said in a webcast telephone call with the Georgia Chamber of Commerce, according to Reuters. “… Our sole proprietors and independent contractors, beauty salon and barbershop sorts of retail spaces are still not able to gain access.”

Federal Reserve Bank of Richmond President Thomas Barkin said the challenge is how to ensure the $2.2 trillion in emergency programs approved by Congress last month gets disbursed to SMBs.

Democratic and Republican leaders on Capitol Hill continued to spar over how the next round of bailouts totaling $250 billion should be disbursed.

All this against a backdrop of the latest U.S. Labor Department report showed 5.2 million Americans filed for unemployment last week. That brings the total to more than 20 million in the last few weeks, setting a record.