Coronavirus Economy: SBA Paycheck Protection Program Deadline Is Midnight And $130 Billion Is Left Over

The paycheck protection program, which initially ran out of money in less than two weeks before Congress passed a second tranche and some companies returned funds, is about to expire – with $130 billion left in the kitty.

The deadline to apply is midnight Tuesday. The program was designed to help small businesses keep employees on the payroll through the coronavirus pandemic rather than send them to unemployment rolls.

Congress provided $349 billion for the program in March and added $310 billion more less than a month later.

The Government Accountability Office reported last week the SBA had obligated $512 billion for the paycheck program, guaranteeing 4.6 million loans. The loans are to be forgiven if restrictions on the ways the money is spent are met.

A full list of who got the funds has yet to be released.

Rules governing who was eligible to tap the funding were revised repeatedly, the last time earlier this month, discouraging some eligible businesses from applying. More than $38 billion was returned by firms deemed too well-capitalized to participate.

The program was designed for businesses with fewer than 500 employees but was hit by complaints that banks processing the loans were more inclined to deal with established clients than needy businesses too small for a significant banking relationship. Technical problems also fouled the loan process.

Sen. Marco Rubio, R-Fla., told the Washington Post he’d rather create new programs for the nation’s more than 30 million small businesses to meet changing needs rather than extend the deadline. The Post said he is working on a measure that would provide $25 billion for businesses with fewer than 10 employees and prevent chain restaurants and hotels from obtaining more than $2 million.

The original legislation limited the way paycheck protection funds could be used, requiring 75% be used for salaries and the rest for rent, mortgages and utilities. The restrictions were eased but Rubio said business needs are changing, as well.

The administration and many economists say the program saved millions of jobs, record-high unemployment notwithstanding.

The closures of businesses mandated by coronavirus mitigation efforts cost the economy an estimated 22 million jobs in March and April. May’s unemployment was pegged at 13.3% after businesses added 2.5 million jobs. The June report is expected to show 3 million more jobs being added, reducing joblessness by at least a point. However, more than a dozen states have been forced to rethink reopening plans, which could slow future recovery.

Treasury Secretary Steven Mnuchin has said he supports additional economic measures.