Almost 90 per cent of the federal government’s $349bn small-business rescue fund has been used up, the Small Business Administration said on Wednesday, raising fears that the programme will be exhausted before Republicans and Democrats can hammer out a deal to replenish it.
The Paycheck Protection Program, which offers small businesses, contractors and sole traders about 10 weeks of payroll expenses to keep them afloat through the crisis, had allocated $311bn of its funding to more than 1.4m companies by 5pm on Wednesday, the SBA said.
A spokeswoman for the SBA would not give an estimate of how long it would be before the funds ran out. If approvals continue at their average rate of $2.75bn an hour between 8.30am and 5pm on Wednesday, the remaining funds would be gone in less than 14 hours.
Negotiations on Capitol Hill to increase the programme’s funding by another $250bn are ongoing, after no agreement was reached last week on additional funding for the PPP.
President Donald Trump sought to place the blame on congressional Democrats, who have sought to include funds for hospitals and local governments in any new spending bills.
“Now, it’s been so good, that it’s almost depleted,” Mr Trump said. “We want to refill it and we can’t get the Democrats to approve it.”
Small businesses have taken to social media and contacted their local representatives to complain about the difficulties in accessing the scheme, which was formally launched on April 3 but delayed at several banks as they grappled with technical and compliance issues.
JPMorgan Chase said on Tuesday that it had already paid out $9.3bn to businesses who applied through the scheme, after being approached by 300,000 companies requesting $37bn. Bank of America said on Wednesday that it had received 279,000 applications under the programme, totalling $43bn, by April 8.
Businesses say the cash is critical for their survival, since it allows them to retain employees while the company is shut down or suffers big drops in revenues. The support is structured as a loan, but the funds are written off if the companies can prove they used the money for payroll or other allowable expenses.
The State Bankers Association, which represents banks of all sizes across the US, wrote to congressional leaders on Thursday afternoon urging them to “expeditiously increase” the PPP’s funding.
“In just under two weeks, the PPP has provided an economic lifeline to over 1m small businesses across the country and has allowed these small businesses to remain viable — and maintain their workforces — during the COVID-19 pandemic,” according to the letter, which was signed by banking associations from Alaska to Idaho and Puerto Rico.
Democrats in the Senate objected to swift passage of the additional funds. The party has countered with its own proposal, which would set restrictions on the extra $250bn for small businesses, in addition to allocating an extra $100bn for hospitals to buy personal protective equipment and expand testing capacity; $150bn more for state and local governments to fight the outbreak while dealing with a decline in revenue; and a 15 per cent increase in food stamp benefits for low-income Americans.
“Democrats know that in order for the Paycheck Protection Program to succeed, it must work for everyone,” Nancy Pelosi, the Democratic speaker of the House, said on Wednesday afternoon. She said her party had been asking the government to help “underbanked small businesses and others who are struggling to access the PPP” as well as “desperate state and local governments” and “hospitals on the front line of the epidemic.
“As has been clear since last week, (the) Republicans’ bill, which fails to address these critical issues, cannot get unanimous consent in the House,” she said.
A spokesperson for Chuck Schumer, the Senate’s top Democrat, said Mr Schumer had been in regular contact with Treasury secretary Steven Mnuchin, and Democratic staffers from both the House and Senate would meet Treasury officials on Wednesday.
Marco Rubio, the Republican chair of the Senate committee on small business, said it was “inexcusable” that the PPP would “grind to a halt tonight”.
“In less than two weeks, the PPP helped over 1 million small businesses receive forgivable loans,” Mr Rubio said. “Now, millions of small businesses are in limbo because Democrats refused to put aside partisan politics and fund this bipartisan program.”
The House and Senate are both in recess and the Capitol complex has been largely closed to slow the spread of the coronavirus. However, the Senate is holding a pro forma session on Thursday, and the House will hold a similar session on Friday.
Congressional leaders said on Wednesday they were “hopeful” that a deal could be reached by the end of the week.
Democratic House majority leader Steny Hoyer, a congressman from Maryland, told reporters on a call on Wednesday that while he could not “guarantee” a deal by Friday, reaching an agreement by the end of the week would be “optimal”.