Lawmakers are nearing a deal expected to replenish the federal Paycheck Protection Program, but even if the round comes to fruition, experts say these funds may not be enough and could run out even faster.
The White House and Congress have reached a deal totaling more than $480 billion, $310 billion of which is dedicated to the Small Business Administration‘s PPP. It also includes $60 billion for the Economic Injury Disaster Loan Program, $25 billion for COVID-19 testing and $75 billion for hospitals, according to news reports.
“The number they’re talking about at $300 billion I’m concerned is not going to be enough for the demand that still exists across the country,” said Rose Oswald Poels, Wisconsin Bankers Association president and executive chief officer.
The first round of funds ran dry in just under 10 days. Oswald Poels says the second round could go even faster due to the pent-up demand accumulated over the 5-day period the program was inactive. There may even be a larger pool of applicants given that many self-employed and independent contractors were not eligible to apply until April 10.
Oswald Poels said the second go around of PPP funding will be smoother than the previous round, citing familiarity with SBA’s E-Tran platform and additional amount of SBA lenders as factors.
U.S. SBA officials say they are not sure what the timeline will look like if Congress approves a second wave of funding. For now, businesses are encouraged to sign up for alerts through the SBA’s website where they will be notified of any updates, U.S. SBA lead economic development specialist Tammie Clendenning said in a Wednesday SBA webinar.
Milwaukee Mayor Tom Barrett and lenders are also encouraging businesses to stay alert for the announcement of additional PPP funding.
“Small Milwaukee businesses deserve the support Congress has offered. But, the only way they will receive that support is to act quickly,” Barrett said. “Local employers need to work with their banks so that they can receive the emergency small business loans.”
Over the course of 14 days, the SBA disbursed 14 years’ worth of loans, Clandenning said. As of April 15, a total of 1,661,367 loans were approved for a total of $342.2 billion through 3,975 lenders across the country. Wisconsin approved 43,395 loans for a total of $8.3 billion, according to a U.S. SBA report.
The overall average loan size for businesses in the U.S. states and territories was approximately $206,000. Loans $150,000 and under composed approximately 74% of all loans disbursed while nearly 22% of loans disbursed were between $150,000 and $1 million. Loans between $1 million and $5 million accounted just over 4% of all loans disbursed, according to the U.S. SBA report.
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