Meanwhile, there’s little sign of progress in boosting the lending program on Capitol Hill, and both chambers of Congress now need unanimous approval for an agreement after the Senate joined the House in extending recess until May 4.
Small to midsize business seeking relief from economic woes due to the Covid-19 pandemic have tapped $247.5 billion from the government’s Paycheck Protection Program through April 13, less than two weeks after the program began accepting applications, according to data released by the Small Business Administration on Tuesday.
The data strongly imply that the economic damage caused by the public health emergency is clustered in the construction, manufacturing, health care and social assistance industries, as well as professional, scientific and technical services.
The first data on loan approvals would strongly suggest that the Paycheck Protection Program is going to be significantly oversubscribed. Congress and the Trump administration are going to have to provide more funding to meet the demand from impaired small and midsize firms. While some members of Congress have thrown around the number $250 billion as a supplement to the first $350 billion put forward, 16.8 million of first-time initial jobless claims put forward over the past three weeks imply that number is simply not going to be large enough.
The SBA, which administers the program under the newly enacted Coronavirus Aid, Relief and Economic Security Act (CARES Act), said more than one million loans had been processed by 4,664 lenders across the country. Texas and California administered the highest amount of loans among U.S. states and territories, processing $21.8 billion and $20.8 billion in gross distributions, respectively. Under the PPP, qualifying businesses can apply for loans of up to $10 million; the loans are administered by banks and guaranteed by the SBA. The overall average loan size was $239,152.
PPP set to run out of funds
But in a blow to those businesses still hoping for access to the funding, the $349 billion loan program will run dry this week, according to White House economist Larry Kudlow who said a rapid injection of money into the account is needed. “At the present run-rate, we’re going to be out of money,” Kudlow said Tuesday in a Fox Business Network interview.
The construction industry led in overall approved loans, receiving nearly $34 billion, followed by professional, scientific and technical services, and manufacturing, which took loans amounting to $30.3 billion for each sector.
More than 725,000 of the approved loans, representing $37.2 billion in funds, were $150,000 or lower. This amounts to approximately 70% of the total loan count, but only 15% of the total dollar amount. Loans of $350,000 to $1 million took up the most cash, totaling $59.3 billion from over 102,000 loans.
Meanwhile, there’s little sign of progress in boosting the lending program on Capitol Hill, and both chambers of Congress now need unanimous approval for an agreement after the Senate joined the House in extending recess until May 4. The first opportunity to enhance the program’s funding in the Senate would be this Thursday. The House could then follow suit to send the bill to the president for his signature.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center
Source: Small Business Administration