$130 billion in small-business aid still hasn’t been used
ASSOCIATED PRESS
Bobby Catone, center, the owner of a Staten Island tanning salon, speaks to a crowd outside his business after being given a summons by police on May 28 in New York. Catone opened the salon briefly in defiance of a law requiring non-essential businesses to remain closed during the coronavirus pandemic.
In April, when the federal government offered $349 billion in loans to small businesses reeling from government shutdown orders in the coronavirus pandemic, the funding ran out in just 13 days, prompting Congress to swiftly approve a second round of $310 billion.
Small businesses have since grown more wary of taking the money.
As of Tuesday, more than $130 billion was left in the fund, known as the Paycheck Protection Program. Even more striking was the fact that on many days last month, more money was being returned than borrowed, according to data from the Small Business Administration, which is overseeing the program — highlighting its messy execution and confusing rules that deterred some small businesses from using the money.
Thousands of companies that got loans have sent the money back, according to lenders. For some owners, the program’s terms were too restrictive; for others, the criteria for loan forgiveness was too murky. Some public companies that received these loans returned them after a public outcry; and in the initial rush, some borrowers accidentally got duplicate loans that they, too, returned.
A total of around $12 billion was returned, Treasury Secretary Steven Mnuchin said at a Senate hearing today. The amount of loans outstanding under the program dropped to $510.2 billion at the end of May, from $513.3 billion in the middle of the month, according to SBA data.
By Tuesday, the amount of approved loans had inched back up to $511.4 billion — indicating that changes Congress made to the program last week to make it less restrictive could be pushing more money out the door.
The turn of events is notable for a signature program of Congress’ $2.2 trillion coronavirus relief package, which only a couple of months ago was caught in an intense borrowing frenzy by desperate business owners.
On Wednesday last week, Congress moved to loosen the program’s rules and give businesses more flexibility in spending their aid, and President Donald Trump signed the bill Friday.
The amended rules could help the remaining $130 billion move faster. However, having the terms of their loans revised on the fly again is a nightmare for borrowers as they struggle to salvage their companies.
