Nonprofit PPP Loan Program Reaches $350 Cap informs charitable execs on the status of the initial $350 billion emergency loan pool established for nonprofits and small businesses derailed by the coronavirus. “The Small Business Administration (SBA) is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time.” the SBA said in a statement Thursday morning.
The Treasury Department and Small Business Administration (SBA) have tapped the entirety of funding allotted for the Paycheck Protection Program (PPP), which offers forgivable loans to small businesses intended to keep workers on the payroll and small firms from going under. Congress continues grapple with how to replenish the CARES Act Paycheck Protection Program. The SBA also said, “The $10 billion Congress appropriated for Economic Injury Disaster Loans (EIDL) had dried up. The program was meant to get fast cash to businesses, providing them with a $10,000 advance within just a few days of application for loans of up to $2 million.
The SBA sent a notice to banks Wednesday night making clear the monies for the program were about to run out. “Once the authorization limit is reached, SBA will not be able to accept any new applications for the Paycheck Protection Program,” the update to lenders states. Also of note: “SBA is unable to maintain a queue for PPP applications.” This is a first-come-first-serve program. Once the funding runs out, the queue of applications can no longer be maintained. That has repercussions for when Congress does actually reload the funds.
Now the attention will turn to those nonprofits and small businesses who are in line but didn’t get through the door: Will Congress government replenish the coffers?
In a joint statement on Wednesday evening, Treasury Secretary Steve Mnuchin and SBA Administrator Jovita Carranza said, “The SBA has processed more than 14 years’ worth of loans in less than 14 days… We urge Congress to appropriate additional funds for the Paycheck Protection Program—a critical and overwhelmingly bipartisan program—at which point we will once again be able to process loan applications, issue loan numbers, and protect millions more paychecks.”
Secretary Mnuchin and Senate Leadership spoke on Wednesday, with staff negotiating throughout the day. But as of late Wednesday night, they had not reached an agreement. A Senate Democratic aide said negotiations with Mnuchin will continue into Thursday. If they are able to reach a deal by early afternoon, the Senate could try to pass it on Thursday, the next time they will are scheduled to briefly be in session at 3 p.m. The House is expected to be in on Friday, otherwise any movement on additional funds will have to wait until next week. Representatives from both sides of the political aisle want to make more money available ASAP. The problem is that they disagree over how to do it. Republicans largely want to add another $250 billion to program, with no restrictions; Democrats want to specify that more funding goes to under-banked businesses.
Mehrsa Baradaran, a professor specializing in banking law at the University of California has thinks The PPP loan program was well intended but had a “structural flaw” in how it was executed, “Any time you create a big program and give banks the ability to choose which customers to prioritize, you’re going to have disparities. Banks are incentivized to choose the customers that make them the most money,” she said.
Here’s what the team at Inside Charity has experienced so far:
Smaller banks have been more nimble and have approved more loans for charities. Many nonprofits who bank with larger institutions (Wells Fargo, Chase, TD Bank, BB&T, etc.) haven’t even been provided the opportunity to apply.
No one knows how much of the $350 billion has actually been disbursed to nonprofits and small businesses. The Small Business Administration is not sharing disbursement figures, nor are the banks—but by all reports it is a very small portion so far.
We are impressed with COVID LOAN TRACKER and their reporting. We would encourage all nonprofits to take a look at how they are contributing to the information flow and determine if your organization should share your PPP Loan experience.
It seems likely, even though you may have successfully completed the application process, that you will not receive funding from the original $350 billion unless your lender has told you that YOUR ORGANIZATION HAS BEEN APPROVED.
We suspect that if completed an actual loan application YOU WILL PROBABLY KEEP YOUR PLACE IN LINE WITH YOUR LENDER. However, our research indicates that the SBA may not maintain a que meaning your lender may have to resubmit your loan application (banks, credit unions and lenders are all using E-TRAN to upload requests to SBA) once the fund is replenished.
Despite the confusion, turmoil and miscommunications the SBA has processed more than 14 years’ worth of loans in less than 14 days. (They only approve 60,000 loan per year and have approved 1,600,000 since April 3rd)
The Paycheck Protection Programs HAD TO RUN OUT! The only way Congress will replenish the fund was for the money to dry up followed by a frustrated electorate demanding action PLEASE CONTACT YOUR REPRESENTATIVES TODAY.
Nonprofit PPP Loan Program Reaches $350 Cap was first posted at INSIDE CHARITY
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