The Paycheck Protection Program (PPP) Has Run Out Of Money

UPDATE: The PPP loan application period ended May 31, 2021. Learn about financing options available for small businesses today at Lendio.com

Congress recently extended the deadline for the Paycheck Protection Program (PPP) loan out to May 31, giving small businesses more time to take advantage of the program that saved many small businesses with loans that could be forgiven if spent on payroll, rent, utilities, or other operational expenditures. The extension of the program brought a sigh of relief to many small businesses still reeling from the pandemic.

But that relief lasted a mere 35 days. Barely a month after President Biden signed the PPP loan deadline extension into law, the New York Times reported that “the federal government’s signature aid effort for small business ravaged by the pandemic—the Paycheck Protection Program—ran out of funding,” after which they “stopped accepting most new applications.”

That program has distributed $780 billion since its creation under the March 2020 CARES Act. And even though Congress had added $284 billion in a December 2020 relief package and another $7.25 billion to the program under President Biden’s American Rescue Plan passed in March, those additional funds have now been almost entirely disbursed. 

“After more than a year of operation and serving more than 8 million small businesses, funding for the bi-partisan Paycheck Protection Program has been exhausted,” a Small Business Association (SBA) spokesperson said in a statement to CNN. The SBA is the government agency responsible for distributing PPP loans. 

PPP loans that have already been approved will still be honored, of course. And if your small business submitted a PPP loan application as recently as the first few days of May before the money ran out, that loan may still be approved. 

“The SBA will continue funding outstanding approved PPP applications, but new qualifying applications will only be funded through Community Financial Institutions, financial lenders who serve underserved communities,” the SBA spokesperson added. 

This is not the first time the PPP loan money has run out. The program ran out of money shortly after starting up in April 2020, and the program had previously expired in August of last year. So the program has ended before, only to start up again.

But with more Americans getting vaccinated and people returning to work, lawmakers may feel that another round of PPP loans is just not necessary now. And given the sheer size of Biden’s last relief package, which passed by only the slimmest of majorities, it seems like a long shot that Congress would add more money to the program.

But there are a few specific types of banks and lending institutions that are awarding the last remaining sliver of PPP loans. And real money is still available in a number of other relief programs, a couple of which are brand new and have just launched in recent weeks.

Who Can Still Award PPP Loans

There is a chance that your small business can still apply for a PPP loan and have it approved, but only if it’s from a lending institution that meets very specific criteria. A small portion of about $8 billion in PPP loan funds still remains, but it’s set aside for a small number of a certain kind of lending institution.

According to their website, “SBA is currently offering PPP loans originated only by participating community financial institutions, including Certified Development Companies (CDCs), SBA Microlenders, Community Development Financial Institutions (CDFIs), and Minority Depository Institutions (MDIs) until May 31, 2021, or until remaining funds are exhausted. Please note that not all community financial institutions are participating in PPP.”

These “community financial institutions” are banks or lending institutions that focus on lending to women-owned businesses, minority-owned businesses, or businesses in underserved communities.

But there are other remaining relief options outside of just PPP loans. SBA said in a statement to the Times that it’s “committed to delivering economic aid through the many COVID relief programs it’s currently administering and beyond.” Your small business may qualify for those programs, and a few new grant and funding programs just started bankrolling needed funds to certain particularly hard-hit sectors.

Restaurant Revitalization Fund

Many restaurants have had limited operations during the pandemic, but most are still operating at a loss. The $28.6 billion Restaurant Revitalization Fund opened in early May, and according to the SBA, will provide restaurants, bars, caterers, and food trucks with “funding equal to their pandemic-related revenue loss up to $10 million per business.” These aren’t necessarily grants, but like PPP loans, they can be completely forgiven if spent on costs like payroll, rent, and utilities.

The dollar amount for which a qualifying restaurant can receive depends on whether the establishment opened before 2019 or during 2020 or 2021. Priority will be given to businesses owned by women, veterans, or the “socially and economically disadvantaged.” You can find more information on the Restaurant Revitalization Fund on the SBA website.

Shuttered Venue Operators Grants

Nightclubs, theaters, cinemas, and museums have generally been shuttered for most of the pandemic, with maybe a little meager income from livestreams or crowdfunding campaigns but an enormous accumulation of debt. A new $16 billion Shuttered Venue Operators Grant opened last month. As noted in the name of the program, this money comes in the form of grants—not loans—and does not have to be paid back. It’s a long-delayed program that Congress passed in December’s relief bill, and after a few early glitches, grants are now going out.

Applicants are eligible for grants of up to 45% of what their gross revenue had been in 2019. You can find more information on the Shuttered Venue Operators Grant on the SBA website.

Will There Be Another Round of PPP?

There has been no substantial discussion of another round of PPP loans, and that decision is up to Congress. The New York Times noted some lawmakers are open to the idea of more PPP funding, though these were all Democrats. Maryland senator Ben Cardin told the Times he “remains open to a bipartisan agreement to add funds to the program.”

Your business can no longer count on PPP loans. But there are other types of SBA loans or general business loans to keep your small business hanging through what may be the end of the COVID-19 economic disaster.

Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice. All information, content, and materials available in this post are for general informational purposes only. Readers of this post should contact their attorney, business advisor, or tax advisor to obtain advice with respect to any particular matter.