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Nonprofit PPP Loan Program Reaches $350 Billion Cap – April 17, 2020

Nonprofit PPP Loan Program Reaches $350 Billion Cap - April 17, 2020

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.

Nonprofit PPP Loan Program Reaches $350 Billion Cap

The SBA approved 1,661,397 loans from 4,975 lenders over 13 days before it was exhausted. Due to bottleneck issues between the agency and banks, only a fraction of those have actually been credited to customers’ bank accounts.

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.

VISIT HERE FOR YOUR CONGRESSIONAL REPRESENTATIVE’S OFFICE NUMBER

VISIT HERE FOR YOUR SENATOR’S OFFICE NUMBER

More funding will become available if we do our part. Please call your elected officials TODAY.

Nonprofit PPP Loan Program Reaches $350 Cap was first posted at INSIDE CHARITY

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7 Comments

  1. Jim Walker says:

    This is extremely frustrating. We applied with Bank OZK by 8:30 a.m. on April 3 and then re-applied by 7:45 a.m. on April 6 when Bank OZK changed the application process. We were told earlier this week that our application was “with a lender” and now there’s no money available. Why? How is it that Bank OZK, a small bank, unable to get this finished for us when we were one of the first ones in line?

    • Jimmy LaRose says:

      Jim,

      YOU ARE NOT ALONE. Our enterprises have been shut down.

      YOU WENT FIRST…YOU DID WELL (so did we)

      Now that we have perspective, is there any difference between $350 billion vs $350 dollars?

      Obviously Not.

      Keep the faith, your PPP Loans are coming.

  2. Zareena uddin says:

    IM a small business owner also a mom who is home now taking care of my 3 kids due to school closed ..im not very good with Accounting and all my accountant for business are closed too..due to covid-19 as i was struggling to get this application done and Finally when i did it i came to know they hold my application as Funds are over ..My question is what should we do now with no funds how to survive with low sales impacted by covid-19 and we still have to pay to Employee to keep busines going ..

  3. We have a non profit 501c3 organization for our youth sports program. We initially applied for the PPP loan. We were told by our bank that we did not qualify because we pay all our workers , including myself, as 1099 independent contractors. I was instructed by my bank to apply to the SBA directly with their
    Economic Injury Disaster Loan (EIDL) for 1099 workers. So we did. Shortly after that I received the following email from the SBA stating that I will not qualify for that advance and to apply for the PPP loan. See SBA email below. Very confused. Any suggestions ?

    From: u s small business administration

    Dear Applicant,
    On March 29, 2020, following the passage of the CARES Act, the SBA provided small business owners and non-profits impacted by COVID-19 with the opportunity to obtain up to a $10,000 Advance on their Economic Injury Disaster Loan (EIDL). The Advance is available as part of the full EIDL application and will be transferred into the account you provide shortly after your application is submitted. To ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000.
    You may be eligible for another loan program, the Paycheck Protection Program, which is available through participating lenders. Below is a comparison of the two loan programs:
    Paycheck Protection Program Full EIDL Loan
    PURPOSE

    Forgivable if used for payroll (minimum of 75% of the funds received) and the remaining for certain operating expenses (amount of any EIDL advance is not forgivable)

    To meet financial obligations and operating expenses that could have been met had the disaster not occurred (amount of any EIDL advance is forgiven)
    TERMS

    Up to $10 million
    1% interest rate

    Up to $2 million
    3.75% for businesses
    2.75% for non-profits
    FORGIVABLE

    YES

    NO – EIDL Loan
    YES – EIDL Advance
    MATURITY

    2 years

    30 years
    FIRST PAYMENT DUE

    Deferred 6 months

    Deferred 1 year

    To locate a Paycheck Protection Program Lender, please visit: http://www.SBA.gov/PaycheckProtection.
    Information on available resources may be found at http://www.sba.gov/coronavirus. For more information on these services, please go to http://www.sba.gov/local-assistance to locate the email address and phone number for the nearest SBA district office and/or SBA’s resource partners.

  4. Wes Wick says:

    Do we have any clear idea how much PPP money went to the nonprofit sector of small businesses?

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