PPP loan funds tapped out

The Small Business Administration announced that Paycheck Protection Program (PPP) funding has been exhausted and the application portal has now stopped accepting applications for loans from most lenders.

SBA said it has reserved approximately $6 billion in funding for previously submitted loan applications subject to SBA hold codes that have yet to be resolved. There is also approximately $8 billion remaining in congressionally mandated funding for PPP loans made by designated “community financial institutions,” defined for bankers’ purposes as minority depository institutions and community development financial institutions, according to a report from ABA Banking Journal.

In its announcement to trade associations, SBA said loan applications that have not yet received an SBA loan number have not been approved.

The exhaustion of funds comes just weeks after the PPP was extended through the end of May to allow borrowers more time to apply for the forgivable loans. While many lenders and borrowers thought the program would likely run out of money ahead of the May 31 deadline, the exact timing wasn’t known.

“For more than a year, banks of all sizes and their dedicated employees have worked day and night to ensure these critical funds reach as many small businesses affected by the pandemic as possible, accounting for 74% of the 10.8 million loans issued and 91% of the $780 billion in PPP loan dollars to date,” said ABA spokesman Ian McKendry.

“Those bank efforts to help small business customers will continue,” he added. “With the portal closed to most lenders, America’s banks will remain focused on helping borrowers still in the pipeline resolve SBA hold codes and other outstanding loan issues, so they can receive their PPP funds.”

The PPP was established in March 2020 as part of the CARES Act in response to the coronavirus pandemic. Since its inception, the program has given more than $780 billion in forgivable loans to more than 10.7 million borrowers, according to the latest available data.

This year, Congress allocated about $292 billion to a new round of the program, allowing some businesses to apply for second-draw loans. In addition, the Biden administration this year relaxed certain rules for borrowers, changed the loan calculation formula for sole proprietors and gave the smallest businesses a priority application window.