As has been widely reported, the Paycheck Protection Program – part of the CARES Act that provided SMEs with 2 months of payroll loans that may be forgiven – has run out of money. The widely lauded plan has struggled to distribute the funds as the Small Business Administration (SBA) has never attempted anything like it and the banks and lending platforms that have scrambled to distribute the money struggled to make sense of the requirements.
But now the money has run out. Meanwhile, SMEs are bearing the economic brunt of the COVID-19 pandemic.
Under the law, $349 billion was made available. All of that money has been requested and it appears it is simply not enough.
Policymakers have frequently said more funding is coming but Congress has struggled to get its act together due to the highly partisan nature of ANY legislation. Of course, many, if not most, politicians have never run a business so there is a bit of a disconnect when it comes to the challenges of a small business.
At the direction of President @realDonaldTrump, I’ve spoken with @SenateMajLdr, @SenSchumer, @SpeakerPelosi, and @GOPLeader to secure an additional $250 billion for the #PPPLoan program to make sure small businesses get the money they need!
— Steven Mnuchin (@stevenmnuchin1) April 7, 2020
Today, in a letter addressed to the Speaker of the House Nancy Pelosi, Representative Patrick McHenry, ranking Member on the House Financial Services Committee, chastised the leadership for its lack of action in providing more funding:
“Yet you and other Democrats are jeopardizing paychecks for millions of small business employees by attaching conditions to additional funding for the program …” said McHenry, adding that the lapse in PPP funding will harm the most vulnerable enterprises.
According to the Hill, the holdup is because Republicans want to pass a stand-alone bill that would include $250 billion in additional money for PPP. A simple addition to the already legislated amount.
The Democrats want to add in $100 billion for hospitals, $150 billion for states and a boost in food assistance funding. Hence the delay.
This week, vocal Fintech CEO Brock Blake, founder of SME lender Lendio, called on the politicians to stop playing games:
1/ While SMBs are suffering, politicians are playing politics.
After many promises made by @realDonaldTrump @stevenmnuchin1 & the @SBAJovita, they have allowed the $349B of PPP funds to run out!
~93% of SMBs in America didn’t have a chance to be funded.
Democrat and…
— Brock Blake (@BrockBlake) April 16, 2020
As part of his SME SOS, Blake has launched a petition that now has over 35,000 signatures. Blake is requesting $500 billion to $850 billion for the PPP.
So will elected officials get things done before its too late?