Banks are sounding the alarm that the upcoming funding round for the federal Paycheck Protection Program (PPP) is likely already tapped.
“Most, if not all, of the funding that Congress is currently considering has already been exhausted,” said Nick Simpson, a spokesman for the Consumer Bankers Association Associated press (AP) on Thursday (April 23).
Due to the large backlog of applications from the first round of funding, it can be assumed that only a few or even new applicants will receive the forgivable loans from the Small Business Administration (SBA). The first $ 349 billion funding round expired on April 16 after more than 1.7 million loans were approved.
Bankers said there were hundreds of thousands of pending applications – and with a daily burn rate of $ 50 billion, the PPP would need about $ 1 trillion to meet demand, according to a politico report.
Around a third of the new funds will be allocated to small banks, but these too will be backed by applications. Some have said that they did one year’s applications in one weekend.
JPMorgan Chase said it has started warning customers of the new funding approval that the money will run out quickly. The bank said CNBC last week that it had to fund $ 26 billion in loans from hundreds of thousands of customers.
Loans can be as high as $ 10 million and are based on a company’s payroll. The loans are forgivable if the money is used to retain or reinstall workers.
The program came under fire after it became known that it had made millions in large loans to public corporations and nationwide chains. HarvardRanked as the richest university in the world with an endowment fund of $ 40 billion, received a $ 8 million loan but decided to turn it down. The hamburger chain Shake Shack said it is back the $ 10 million it received through the program.
The SBA has issued New rules It said it will make public companies unlikely to receive money from the next round of coronavirus bailout funding.