Washington’s nearly $1 trillion small business rescue, now under the watch of President Joe Biden, is about to slam into a new obstacle — it’s already running out of money.
The Small Business Administration is warning lawmakers that funds for the Paycheck Protection Program, which offers forgivable loans to small businesses, will likely dry up later this month, well before the May 31 deadline for firms to request aid. As of last week, it had about $66 billion remaining out of the nearly $292 billion appropriated by Congress since December.
The cash crunch, the result of continuing demand, is sneaking up on policymakers only days after Congress and the Biden administration agreed to give businesses another two months to apply for the loans in a bid to ensure that the self-employed and other tiny businesses wouldn’t miss out. Lawmakers didn’t include new funds as they hurried to pass the extension before leaving Washington for a few weeks.
Now, some advocacy groups are warning that the funding lapse could leave thousands of small businesses on the sidelines and that Congress must spend billions more, particularly to help those that Biden promised to support with more generous loan terms implemented last month.
“This is unfair for the smallest businesses to be shut out in the final hours,” said Erik Asgeirsson, an executive with the American Institute of CPAs, which is calling for more PPP funding. “A lot of false hopes were raised.”