Federal PPP loan money could be gone within days, Washington banking officials say
Banking officials said Monday the Small Business Administration is expected to run out of money for its Paycheck Protection Program by as soon as Thursday.
Washington bankers have been inundated by the demand for the loans, which draw from nearly $350 billion Congress made available April 3 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In the 10 days since the loans became available, the SBA has processed 900,000 loans totaling more than $220 billion, according to the Washington Bankers Association (WBA).
“I think when you stop an economy in midstream, the collateral damage that small businesses are facing is pretty monumental,” WBA President and CEO Glen Simecek said. “If you can move $220 billion in a week of a $350 billion program ... the demand is going to outstrip the $350 billion originally proposed.”
PPP loans are designed to keep the workers at small businesses on the payroll during the COVID-19 pandemic. The SBA says it will forgive the loans if all of a businesses workers stay employed for eight weeks and the money is used for rent, mortgage interest, utilities and payroll. Loan payments can be deferred for six months, and the loans don’t have to be backed by collateral. Loans that aren’t forgiven mature at an interest rate of 1 percent.
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