the balance, August 14, 2020: $134 Bln Goes Untapped After PPP Deters Small Businesses
Even with more than 16 million people still out of work, and stores and restaurants shuttering across the country because of the COVID-19 pandemic, the federal government’s loan relief program for small businesses expired with $134 billion untapped.
Despite extending the application deadline from June 30 to Aug. 8, the Paycheck Protection Program didn’t wind up using nearly all the funds allocated by Congress. About $525 billion of the $659 billion appropriated was actually loaned out, according to data provided by the U.S. Small Business Administration, which operated the program. In fact, in the additional 5 ½ weeks, total approved loans grew by just $3.5 billion.
While the SBA says the untapped funds show the program worked, small business advocates and advisors say the PPP’s flawed design, chaotic start, and changing rules were deterrents for many potential applicants. Studies by the Brookings Institution and Federal Reserve Bank of New York indicate loans didn’t always go to the areas with the most need.