By Michelle Price
UCBJ Managing Editor
WASHINGTON – Small business owners who were not included in the first round of the government’s Paycheck Protection Program (PPP) or the Economic Injury Disaster Loan (EIDL) will have to wait at least a while longer after funding was depleted Thursday morning.
Just before 11 a.m. on Thursday, the Small Business Administration (SBA) announced that it was no longer accepting applications from business owners or lending banks.
A notice went up on the SBA website that said: “SBA is unable to accept new applications at this time for the Paycheck Protection Program or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.
“EIDL applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.”
Applications for billions beyond the available funding were received by banks around the nation, working closely with SBA lenders.
By law, the SBA is not able to issue new loan approvals once the programs experience a lapse in appropriations.
In a teleconference on Wednesday with business leaders from around the state, U.S. Rep. John Rose (TN-6) said that the SBA had been approving $2 million in loans per hour.
“The SBA has processed more than 14 years’ worth of loans in less than 14 days,” according to a joint statement from U.S. Treasury Secretary Steven T. Mnuchin and SBA Administrator Jovita Carranza. “The high demand we have seen underscores the need for hardworking Americans to have access to relief as soon as possible.”
The statement urged Congress to appropriate additional funds for the PPP, calling it a critical and overwhelmingly bipartisan program.
Following days of political wrangling, Congress is expected to consider another relief plan next week. Until a new plan is in place, the businesses may apply for the Federal Reserve’s new Main Street Lending Program.
The Main Street loans have variable interest rates that currently range from 2.5 % to 4%. Main Street loans start at $1 million and to a maximum of $10 million. The repayment period is four years, and the loan does not have a forgiveness clause. To be eligible, companies need to have at least $250,000 in earnings before interest, taxes, depreciation and amortization (EBITDA), and no debt. Companies with debt have higher EBITDA requirements.