A landmark piece of the CARES Act designed to help small businesses stay in business is already out of money.
Thursday morning, the federal government’s small business rescue program, the Paycheck Protection Program, ceased accepting new applications, leaving countless businesses without an alternative to secure funding to continue paying their employees.
The program was established as part of the CARES Act and provided nearly $350 billion to help small businesses, but just over two weeks after lenders were first able to accept loan requests, the Small Business Administration said Thursday that the program’s funding has been exhausted.
Under the program, banks could apply to provide loans to small businesses to enable those businesses to continue functioning while the coronavirus has the country shut down.
The program is designed to provide small businesses with money to pay up to 8 weeks of payroll costs, including benefits. According to the SBA, the funds can also be used to pay interest on mortgages, rent, and utilities.
“Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities,” the SBA said.
But the program was beset with complications from the beginning, with lenders unable to process initial requests to provide the loans, small businesses unable to properly request PPP funding, and some banks even reportedly favoring their own clients over non-clients.
Beyond that, the entire process seemed to be very confusing and unwieldly for all involved, including those in the housing industry.
Over the last week, numerous companies in housing have complained of being unable to request PPP funding due to various reasons and being unable to actually receive funding.
In many cases, businesses in the housing industry were left confused about whether they were even eligible for PPP funding or not, getting differing advice on the matter depending on which bank or lawyer they talked to about it.
And the lenders themselves were confused about which companies they could even lend money to.