Paycheck protection programs, an important part of the federal government’s financial response to the coronavirus, are largely underfunded. Only $ 8 billion remains in the program, and since its launch over a year ago, it has distributed nearly $ 800 billion in permissible loans.
The Trump administration has claimed this initiative for small businesses, but a significant portion of the bailout will initially be for businesses with thousands of employees or.. A loophole in the Small Business Administration (SBA) program allowed us to distribute money to restaurants and hotels that are not generally considered small businesses.
The latest round of paycheck loans began in early January and provided $ 284 billion in funding. The American Rescue Program, passed in March, added an additional $ 7.25 billion to the program.
The remaining $ 8 billion in PPP fundingFinancing companies, generally run by women, minorities, and other poorly serviced communities. As a result, most companies keep the application window closed.
It’s a few weeks earlier than expected. The program was scheduled to conclude May 31st. The SBA said it will continue to fund loans that are already in the application process, but will not accept new applications.
“After more than a year of operation and serving more than 8 million small businesses, the funds for the bipartisan paycheck protection program have been exhausted,” an SBA spokeswoman said in a statement Wednesday. ..
While the economy recovers during a pandemic, PPP’s legacy can be mixed as a policy aimed at supporting millions of businesses. A popular program that offered ultra-low-interest loans to cover employers’ salaries and other costs was able to distribute billions of dollars in support early in the crisis.
The biggest attraction was that the loan was fully forgiven, interest-bearing, and everything, unless the funded company dismissed the employee during the loan period. The first round of funding for the program was $ 350 billion..
However, the program was accused of distributing a significant portion of these funds to both large and possibly non-large companies...Many major chains eventually end up with hamburger chains Shake Shack, luxury steakhouse Ruth’s Chris, car dealers AutoNation, and more. Tens of millions of dollars they got from the program after public backlash.Some banks also It is said to have favored larger customers in the distribution of loans. Some of those proceedings were dismissed.
“Roughly speaking, it seems to have done what we expected,” said Rich Princinzano, director of policy analysis for the Pennsylvanton Budget Model, a nonpartisan research group at the University of Pennsylvania’s Business School. “It saved my job.”
The exact number of jobs that PPP has saved is still controversial.
Initially, the SBA said the program saved 50 million jobs. However, that number was based on the number of workers in the loaned company and was not necessarily saved, so it was quickly dismissed. The Treasury has since made that number 19 million, but some studies suggest that it is much less.Ann MIT research Since last year, the first $ 500 billion in PPP loans has saved 2.3 million jobs and is estimated to save about $ 224,000 per job.
Dean Baker of the Center for Economic Policy Research, a left-wing think tank, believes PPP has helped keep many businesses open and keep their jobs.
“This is a good thing and we can better prepare for the resumption we are seeing now,” he said.
Paycheck programs are underfunded by most small businesses
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