PPP Is Out of Money – Is the PPP Loan Program Over? – PPP Ran Out of Funds?
News sources are reporting that the PPP Loan Program is Out of Money and that the PPP program is over so banks are not accepting new PPP loan applications. We still have to wait for official SBA notice to see if the PPP programs are really out of funds.
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An article in the New York Times published 5/4/21 reads as follows:
“The Paycheck Protection Program is out of money and closed to most new applications.
Four weeks before its scheduled end, the federal government’s signature aid effort for small businesses ravaged by the pandemic — the Paycheck Protection Program — ran out of funding on Tuesday afternoon and stopped accepting most new applications.
Congress allocated $292 billion to fund the program’s most recent round of loans. Nearly all of that money has now been exhausted, the Small Business Administration, which runs the program, told lenders and their trade groups on Tuesday. (An earlier version of this item misstated that the actions it described occurred Wednesday.)
While many had predicted that the program would run out of funds before its May 31 application deadline, the exact timing came as a surprise to many lenders.
“It is our understanding that lenders are now getting a message through the portal that loans cannot be originated,” the National Association of Government Guaranteed Lenders, a trade group, wrote in an alert to its members Tuesday evening. “The P.P.P. general fund is closed to new applications.”
Some money — around $8 billion — is still available through a set-aside for community financial institutions, which generally focus on lending to businesses run by women, minorities, and other underserved communities. Those lenders will be allowed to process applications until that money runs out, according to the trade group’s alert.
Representatives from the Small Business Administration did not immediately respond to a request for comment.
Some money also remains available for lenders to finish processing pending applications, according to a lender who was on a call with S.B.A. officials on Tuesday.
Since its creation last year, the Paycheck Protection Program has disbursed $780 billion in forgivable loans to fund 10.7 million applications, according to the latest government data. Congress renewed the program in December’s relief bill, expanding the pool of eligible applicants and allowing the hardest-hit businesses to return for a second loan.
Lawmakers in March extended the program’s deadline to May, but they have shown little enthusiasm for adding significantly more money to its coffers. With vaccination rates increasing and pandemic restrictions easing, Congress’s focus on large-scale relief effort for small businesses has waned.”
Apparently, the PPP loan program has run out of funds and some banks are saying to applicants that they stopped accepting new PPP loan applications; that’s what we’re going to talk about in this video. Hello from Freedom Tax Accounting, we’re an accounting firm where we have been providing quality tax and accounting services now for over 20 years. This video is being recorded on May 5th and it is 9:03 AM eastern standard time. And the importance of the date and time of the recording of this video is that realistically, whatever we discussed in this video may change as soon as in a couple of hours. So, it’s very important that you subscribe to our channel, that way you’re always up to date with the most current and correct information relating to the PPP loan program.
Now, what’s in the news? If you have been paying attention to the news you may have read from other news sources that the PPP program ran out of funds. Now let’s make something very clear, and once again it is May 5th and it is 9:03 AM eastern standard time. There has been no official communication from the SBA saying that the PPP funds have run out. This news is coming from the banks. There are several banks saying that late last night, meaning on May 4th when they tried to submit pending PPP applications to the SBA portal, the SBA portal responded back that the SBA is not accepting new applications. So, the banks are saying that because the SBA portal is saying that they are not accepting new applications that they feel that the PPP funds ran out. Now that may be true but remember the SBA e-tran portal system has been very buggy and it has been having issues forever so this may be that the SBA portal is having issues okay so once again it may be true but there has been no official communication from the IRS up until May 5th, 9:03 AM standard time.
Now I feel that the PPP program has not run out of funds and let me explain why. This is why we feel that it makes no sense that the PPP ran out of funds. Let’s take a look at this report that the SBA came out. Three days ago the SBA published this is the official SBA report on the PPP program, and it was published on May 2nd– three days ago. According to this, the PPP program has approved 780 billion dollars okay. That’s 780 billion dollars that the PPP program has given out. Now the total amount of funding available for the PPP is 813 billion dollars that’s the total amount of funds that congress allocated to the PPP loan program. So, if 813 billion dollars were allocated and the SBA has said in this form in this document that was published three days ago that only 780 billion dollars have been approved, that means that there should be 33 billion dollars left. And if you have been following the PPP program, the PPP program basically funds almost a billion dollars a day. So, that means that there should be enough money available for at least a month or at least three or four more weeks.
Now we do know that out of the 33 billion that should be left, we know 8 billion of that specifically allocated for community and local banks. So, we know out of the 33 billion that 8 billion should be left but still, there should be 25 billion dollars left. So, that’s why I think that the PPP loans should have additional funding. Now unless the SBA has made a study of the remaining applications that are left, and they said that everything’s going to be gone and we’re only going to approve the applications that have been submitted so far that may be the case. But once again the SBA has not officially said that the PPP program is closed and that the funds are running out. This is news coming from the banks because when the banks tried to send applications to the SBA portal the SBA portal replied back to the bank saying that they are not accepting new applications there. Maybe a glitch in the system. Maybe something is wrong with the SBA portal. We still don’t know. We have to wait for the official SBA publication saying that the PPP is over and that it ran out of funds.
Now let’s say that the PPP did run out of funds if you have a pending application and you already signed your SBA note because when you apply for PPP you first have to sign your PPP application and then when the SBA provides an SBA loan number, you signed the SBA note. So, if you have not been funded but you already signed your SBA note where you have your loan number, the loan name, the amount basically the SBA has already allocated these funds for you and it may just be a matter of time until your bank finishes the funding process. So, if you already signed the note then you should be okay.
Now, what happens if the reality is that the SBA comes out today at some point and says, “Yes the funds ran out. The PPP is closed.” So, what should you do?
The first thing you have to do is keep calm okay because even with this news coming late last night, we have had a lot of calls of people freaking out, and you have to stay calm okay.
Another thing you can do, you can call your congressman and you can ask if it is true that the PPP ran out of funds, get in contact with your congressman because I feel that if the SBA comes out and says that yes, the PPP funds ran out, I feel that congress is going to maybe allocate additional funds to the program because this program the government wants it to end by the end of May okay. So, you can call your congressmen and let them know that if the PPP program ran out of funds, please do something about it and put more money into the program.
Another thing you can do is get in contact with your local banks. Remember that eight billion dollars of the total funding was allocated for local community banks, so they may still have funding available okay; so that’s another option that you have. Or you have other funding options as well. Once again, let’s say that it is true that at some point today the SBA says, “Yes the PPP is over. No funding left.
Remember that the SBA also has the SBA EIDL loan program that is available till the end of the year. So, if your business still needs more financial help, you have options. You can still apply for the SBA EIDL loan. You can check if there are local grants, at least I know of several local grants that are available. You can check with your city, you can check with your county, you can check with your state because there are local grants available. I would recommend that you contact your local chamber of commerce. They usually help out and know every grant available that is for the businesses in their community, so that’s another thing you can do if the PPP is done okay. Also, if you are an owner of a restaurant, remember that this week the SBA started the SBA restaurant revitalization fund or the SBA RRF; that’s what they’re calling it. So, if you are a restaurant or work in the food service industry the SBA has a new grant program to which you can apply as well okay.
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