The PPP Program has run out of money. What’s Next?

PPP Is closing down. What’s Next?

With only 3 Weeks to Go before its original planned shutdown date of 5/31, the PPP program is officially out of cash, as per the SBA (Small Business Association) announcement.  The Small Business Administration has notified all lenders that general funds devoted to the program had run out, and that they should direct borrowers to community financial institutions or other lenders if they want a PPP loan.

Going forward, the program will only accept new applications from community financial institutions, which typically serve minority borrowers.  The program had set aside about $8 billion for such businesses.

Importantly though, for borrowers who have already applied prior to this announcement, the SBA will continue to fund outstanding approved PPP applications from  lenders, but they will not accept any new applicants.

The exhaustion of funds comes just weeks after the PPP was extended through the end of May to allow borrowers more time to apply for the popular forgivable loans. While many lenders and borrowers thought that the program would likely run out of money ahead of the May 31 deadline, the exact timing wasn’t known until now.

About the PPP

The PPP was established in March 2020 as part of the CARES Act in response to the coronavirus pandemic. Since its inception, the program has given more than $780 billion in forgivable loans to more than 10.7 million borrowers, according to the latest available data.

This year, Congress allocated about $292 billion to a new round of the program, allowing some businesses to apply for a second round of loans. In addition, the federal government this year relaxed certain rules for borrowers, changed the loan calculation formula for sole proprietors and gave the smallest businesses a priority application window so that they could better take advantage of the program. 

The updated rules definitely helped certain borrowers who had been previously shut out of forgivable funding to get loans, but also added to confusion and frustration for others who missed out on bigger loan amounts by just a few days. In addition, banks and borrowers also called on the SBA and Congress to make some of the rules retroactive to help more businesses as the U.S. economy opens back up.

Even as vaccinations continue and the U.S. eases restrictions and the country returns to a state closer to normal operating conditions, small businesses are still struggling.  In an effort to provide further assistance, there are now other relief programs available through the SBA, including some that also give grants to businesses.

The SBA’s Restaurant Revitalization Fund began accepting applications on Monday. The program was established in March as part of the $1.9 trillion stimulus package and was allocated $28.6 billion in funding. In the first 21 days, the SBA will only approve applications from small businesses owned by women, veterans or socially and economically-disadvantaged people. 

However, there are worries that the funding won’t be enough to help all the businesses that still need support. In the first two days of the program, 186,200 restaurants, bars and other eligible businesses applied for funding, according to a White House report released Wednesday.

In April, the SBA also reopened applications for the Shuttered Venue Operators Grant Program, which includes $16 billion in funding for theater owners and other live venue operators who had to close during the pandemic. The SBA will approve applications in tiers, addressing those with the highest  revenue loss first.

These programs are especially important for small businesses now that the PPP has been exhausted for most.

What’s Next for Small Businesses needing funding?

Lending remains somewhat tight with the big banks. As such, the SBA is recommending small businesses look to community banks for funding, especially women and minority-owned businesses.

Alternative lenders are another source of funding for those needing immediate working capital. Products offered by alternative lenders such as working capital advances or business lines of credit may help fill the void left by the absence of the PPP program.

About Small Business Funding

We are the one stop alternative financing funding source. Regardless if you have bad credit, short time in business, tax liens, judgments, or fast capital needs, we are your solution.

Our philosophy is why work harder when you can work smarter? That’s why Small Business Funding, through our network of financial partners, work with multiple providers on your behalf. Getting you the best rate and terms for your business.

Our network offers you access to quick and easy working capital to meet your individual business needs. We will put together a program to suit your business goals and financial situation, with ease. Why fill out 2, 4, even 6 applications when all you need to do is fill out one?

We recognize that small businesses are the driving force to grow our economy. In good times, as well as the challenging times, business owners need a fast cash flow solution.  Whether you use it for payroll, purchase new equipment, expand inventory, pay taxes, etc. Fact is, it doesn’t matter what you use the funds for, as long as it helps grow your business and increase your revenue!

If your company was turned down by traditional lending sources, such as banks and other commercial lending institutions, Small Business Funding can help.

Join our family – we look forward to serving you. Apply today