Small business loan funding for coronavirus relief runs out after only 14 days
Source: Nations Restaurant News
The Small Business Administration on Thursday stopped accepting applications for Paycheck Protection Program, or PPP, loans and Economic Injury Disaster Loans, or EIDL, saying it has run out of funding.
A “lapse in appropriations” notice on the SBA’s website states, “The SBA is unable to accept new applications at this time for the PPP and EIDL-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.
The news comes as many restaurant operators are still struggling with the application process. The program was launched on April 3 after Congress approved a $2 trillion Coronavirus Aid, Relief and Economic Security, or CARES Act, in late March, which included the $349 billion PPP loan program for small businesses.
As of Wednesday night, the SBA had reportedly approved more than 1.4 million loans with a value of more than $315 billion.
“The SBA has processed more than 14 years’ worth of loans in less than 14 days,” said Treasury Secretary Steve Mnuchin and SBA Administrator Jovita Carranza in a joint statement on Wednesday. “The Paycheck Protection Program is saving millions of jobs and helping America’s small businesses make it through this challenging time. The EIDL program is also providing much-needed relief to people and businesses.”
But both Mnuchin and Carranza urged Congress to appropriate more money to continue funding the program.
“The high demand we have seen underscores the need for hardworking Americans to have access to relief as soon as possible. We want every eligible small business to participate and get the resources they need,” the statement said.
Last week, Republican lawmakers indicated they would seek an additional $250 billion in funding, but that plan was stymied by Democrats who wanted to see even more in the legislation for hospitals, local governments and other needs.
On Thursday in a bipartisan effort, Senators Corey Booker (D-N.J.) and Sen. Steve Daines (R-Montana) called for more funding specifically for those businesses likely to be left out of the PPP program, including those with 20 workers or less, or those with 50 or less in low-income neighborhoods.
In a letter to Majority Leader Mitch McConnell and Minority Leader Chuck Schumer, the senators outlined a proposal for $50 billion to create a Small Business Local Relief Fund that would give direct assistance to cities, counties and states to target very small, minority-owned, rural and other businesses left outside the mainstream banking system.
Existing local relief efforts are massively oversubscribed, the letter said. New Jersey’s Economic Development Administration made 2,000 micro-grants available, for example, but the program received 10,000 applications within 75 minutes of launching the application portal.
In Chicago, a $100 million small business fund was launched March 31 and within four days had received applications for more than $215 million, the letter said.
It’s not clear, however, whether more funding could be approved until next month. Lawmakers are reportedly in their home districts and not expected to return to Washington until early May.
Meanwhile, restaurant chains like Ruth’s Hospitality Group Inc., parent to Ruth’s Chris Steak House, said in a Securities and Exchange Commission filing its two subsidiaries have received a total of $20 million in SBA loans through the CARES Act with JPMorgan Chase Bank. The company also has a revolving credit facility of $150 million, and about $86.6 million in cash on hand as of April 10.
Potbelly Sandwich Works LLC, also last week said in a filing it has won a $10 million PPP loan with JPMorgan Chase Bank. And Fiesta Restaurant Group, parent to more than 300 Taco Cabana and Pollo Tropical restaurants, also won a $10 million PPP loan with JPMorgan.
The PPP program is designed for employers of 500 or less, but the National Restaurant Association won a carveout exemption for restaurants and hotels, allowing those industries specifically to apply for the loans based on having fewer than 500 workers in one location.