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A lending program designed to help provide small businesses temporary relief from the economic effects of the COVID-19 pandemic is out of money.

The Small Business Administration announced on its website April 16 that the organization is unable to accept new applications for the Paycheck Protection Program, a $349 billion component of the $2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES) signed into law on March 27.

The PPP portion launched April 3.

An additional $250 billion in funding could be allocated amid the prolonged shutdown of businesses across the country if members of the U.S. Congress can come to terms on the proposed spending package.

The SBA and the U.S. Treasury Department issued a joint statement on April 15 calling on Congress to allocate additional funding.

“The SBA has processed more than 14 years worth of loans in less than 14 days,” the statement reads. “The Paycheck Protection Program is saving millions of jobs and helping America’s small businesses make it through this challenging time. The EIDL program is also providing much-needed relief to people and businesses.
“By law, the SBA will not be able to issue new loan approvals once the programs experience a lapse in appropriations.
“We urge Congress to appropriate additional funds for the Paycheck Protection Program—a critical and overwhelmingly bipartisan program—at which point we will once again be able to process loan applications, issue loan numbers, and protect millions more paychecks.
“The high demand we have seen underscores the need for hardworking Americans to have access to relief as soon as possible. We want every eligible small business to participate and get the resources they need.”

Meanwhile, funds for another, yet smaller, loan program through the SBA also have been exhausted.

The SBA says it is unable to accept new applications for its Economic Injury Disaster Loan (EDIL) program.

That initiative provided businesses up to $10,000 of economic relief.

PPP loans were made available to businesses with fewer than 500 employees, including sole proprietorships, independent contractors and people who are self-employed. Private nonprofit and veterans’ organizations affected by the COVID-19 pandemic also were allowed to apply.

Employers that meet that criteria were able to apply for PPP loans up to two and a half times their monthly payroll costs, up to $10 million.

Loans are forgivable if borrowers meet certain criteria, such as using 75 percent of the loan amount for payroll costs and maintaining employee counts.

In Kansas, 26,245 PPP loans were issued totaling nearly $4.3 billion, according to SBA data through April 16.

Other loan options for small businesses

Other SBA lending programs still are available to assist small businesses during the pandemic.

One option is a 7(a) loan program called SBA Express.

That type of loan typically is capped at $350,000 with a 50 percent guarantee. However, that amount is being raised to $1 million with a 100 percent guarantee due to the coronavirus pandemic, according to the SBA.

Interest rates are negotiated between the lender and borrower, but the rate can’t exceed the SBA maximum.

Typical turnaround time to get approval for these loans is around 36 hours.

Business owners also should consult with their lending institution to discuss financing options.

About us: As the Heartland’s leading employer services company, Syndeo partners with local business owners to help them minimize risk, improve efficiency and maximize profitability allowing them the freedom to focus on growth and fulfilling their mission. Syndeo fulfills its mission by taking on all of the HR responsibilities for our clients’ workforce, including employee relations, benefits, risk management and payroll.

Winner of the 2020 Best of HR Services Award through ClearlyRated for providing superior client service. See our ClearlyRated profile here.

 

~Josh Heck, Marketing Manager, Syndeo