The economy in the US as well worldwide is sinking amid coronavirus. Over 22 million people have filed unemployment claims which are by far the highest in US history.
The Administrator of Small Business (SBA) lending program, which is designed to help businesses affected by the US COVID 19 pandemic, said they ran out of money and cannot accept any further applications.
The U.S. Treasury Department and Congress leaders were in talks to reach an agreement to bring new resources to the program. However, they failed, and the $349 billion management program announced Thursday morning that they have run out of money.
The SBA revealed the situation on their website and insisted that they are currently not accepting new applications for the paycheck protection program based on the funds available. Also, they added that they cannot register new PPP lenders now.
The program was launched as part of a $2 trillion stimulus package that Trump signed a few weeks ago. His main mandate was to guarantee small businesses bank loans so they could keep their workforce during this current world pandemic.
It was a provision that SBA would grant the loans if they were to be used to pay staff salaries or other material costs. This made it attractive for small businesses that are heavily affected by mitigation measures against the virus, and it can help those businesses stay afloat.
The Republicans considered adding $250 to the program as an extension of the program. The Democrats were also ready to support the same amount. However, they called for new legislation to limit funding for other programs.
They said a supplementary bill should include an additional $100 billion to fund hospitals buy PPE and also expand coronavirus testing capacity. In addition, local states and the government be given $150 billion and 15 percent of the fund go to food stamps.
Republican chairman of the Senate Committee on Small Business and Entrepreneurship Marco Rubio said the SBA had approved over $300 within 12 days. It is now frozen and no longer accepts new funding applications.
The disagreement between the Trump administration and the lawmakers over the additional funds to be channeled into the SBA has been criticized by the National Federation of Independent Business, the country’s primary advocacy group for small businesses.
The organization’s president, Brad Close, said America’s small businesses are marginalized and are desperately trying to keep their doors open and support their workers. And now they have been disappointed by disagreements between the Trump administration and the legislature.
Mr. Close added that there were concerns that the SBA could run out of funds before additional funds were injected, and the day came true on Thursday.
On the other hand, banks have sought additional protection against the risk of granting these PPP loans. Now the Federal Reserve facility will support the effectiveness of PPP by lending to financial institutions.
They said that providing financial institutions with additional liquidity will help increase their ability to provide PPP loans.
Wayne Sims is the Lead Editor for Chroniclex with 12 years of experience. Wayne has been working for Many Large Online Publications for nearly a decade and has published his articles in many prints and digital publications including Erieview Newsstand, Bond Court News and Private Entertainment. When Wayne is not busy writing She likes stitching.