SBA Paycheck Protection Program Running Near Empty Again, More Than $549 Billion Handed Out

More than three-quarters of the more than $650 billion approved by Congress for the paycheck protection program has been doled out, the Small Business Administration confirmed. Since the second round of the paycheck program began last Monday, more than $175 billion has been given out, with the loans averaging $79,000.

The first $349 billion in funding, approved March 27, ran out less than two weeks after banks began accepting applications. A second round of funding totaling $310 billion, with $60 billion set aside for the smallest lenders, was approved April 22. The loans are to be forgiven if 75% is used to pay employees.

“Since round 2 of PPP loan processing began on April 27, 2.2 million loans have been made to small businesses, which surpasses the number of all loans made in PPP Round 1,” SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin said in a press release. “The total value of these 2.2 million loans is over $175 billion. Notably, the average loan size in round 2 is $79,000, yet another indicator that the program is broadly based and assisting the smallest of small businesses.”

Some 3.8 million loans have been processed since April 3, they said.

Chase said it had been approved for $29 billion in paycheck funding for 239,000 businesses, with loans averaging $123,000. Chase said half the loans went to companies with fewer than five employees, and 40% of the loans were for less than $25,000. The largest number of Chase loans went to companies in New York, followed by California, Texas, Illinois and Michigan.

Bank of America said Monday it had received approval for 265,000 loans totaling $24.9 billion and hailed the SBA for speeding up the approval process. The bank said 98% of its loans are going to companies with fewer than 100 employees, with 76% going to companies with fewer than 10.

There were no updated figures from Wells Fargo, Citigroup or U.S. Bancorp.

During the first round of funding, Bank of America was accused of favoring larger loans over smaller ones to generate larger fees for itself. Similar allegations were lodged against Wells Fargo, Chase and U.S. Bancorp.

Lawmakers approved the program as the U.S. unemployment rate climbed as a result of layoffs forced by coronavirus shutdown orders. In the six weeks since governors began issuing stay-at-home hours and closing nonessential businesses, more than 30 million Americans have filed initial unemployment claims.

Senate Democrats are now proposing a tweak to the program that would take banks out of the process, allowing the federal government to provide direct grants to businesses.

“Instead of allowing businesses to go into free fall and trying to pick up the pieces later, we’re proposing a guardrail at the edge of the precipice. Our plan gives workers the steady comfort of a consistent paycheck from an employer they can go back to when the crisis abates,” Sen. Richard Blumenthal, D-Conn., said in unveiling the measure along with Sens. Bernie Sanders of Vermont, Mark Warner of Virginia and Doug Jones of Alabama.