The US Small Business Administration will restart a government coronavirus relief loan program for small businesses next week with an additional $320 billion, after the first round of funding was exhausted in just 13 days.
The SBA will resume accepting applications for its Paycheck Protection Program at 10:30 a.m. New York time on Monday, the agency and U.S. Treasury Department said in a joint release.
“We encourage all approved lenders to process loan applications previously submitted by eligible borrowers and disburse funds expeditiously,” Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza said in the statement.
Many small business owners were shut out from financial aid after the initial program, launched April 3 with an initial $349 billion, was exhausted by April 16. Congress passed a relief bill that President Donald Trump signed Friday with more funding for the program and a separate disaster loan and grant initiative whose funding also expired last week.
Starting Monday morning “will give everybody the rest of today, through the weekend, for the lenders and everyone to get ready,” Senator Marco Rubio of Florida, chairman of the Senate Committee on Small Business and Entrepreneurship, said in a tweet on Friday.
The initial program launch was rocky, after guidance for lenders to process loans wasn’t issued until the night before, some large banks didn’t participate initially or only took applications from customers with existing loan accounts, and the SBA’s processing system was inaccessible at times because of the volume of applications.
There are questions about how smoothly the program will relaunch because some banks continued to take applications after the SBA stopped accepting them, and large banks are ready to flood the SBA with those applications and others that weren’t processed in the first round.
Large public companies and big chains including Shake Shack Inc. and the operator of Ruth’s Chris steak houses have started returning their loans amid criticism that they were taking loans at the expense of smaller firms. The Trump administration also issued guidance on Thursday that it’s unlikely a public company with substantial market value and access to capital markets would qualify for a PPP loan -- and that companies have until May 7 to return their loans without penalty.
The SBA and Treasury also clarified on Friday that hedge funds and private-equity firms are ineligible to participate in the program, potentially quelling a barrage of outrage over the possibility that well-heeled traders might beat out struggling small businesses for relief aid.
As a result of companies returning their loans, “an additional significant amount of money” will be available to make more PPP loans, Rubio tweeted.
The SBA has said there have been upgrades to its processing system, called E-Tran, and that the system was updated to account for a provision in the new relief bill requiring that smaller lenders disburse at least $60 billion of the funding, another concern for potential delays in processing applications.
Advocates for small businesses are concerned the funding could be exhausted again after just a few days, and about whether smaller mom-and-pop firms will be able to get funding -- especially those that have not already applied and don’t have applications in line to be submitted when the program restarts.