UPDATE: Funding for the Paycheck Protection Program will once again be available starting April 27 as a result of a deal between Congress and the White House.
On April 16, the popular Paycheck Protection Program (PPP) ran out of its $349 billion in appropriations. On its website, the Small Business Administration has the following message: “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.”
While the lapse in appropriations of the EIDL is notable, the majority of inquiries we have received have been regarding the much larger PPP. Although the SBA is no longer taking PPP applications from lenders, this does not mean that all of the available funds have been disbursed. Therefore, some borrowers who have applied for the PPP, but not yet received any proceeds, may still receive funds. Applicants should check with their lenders on the status of their application. Lenders have been submitting PPP applications to the SBA via the SBA’s Capital Access Financial System (CAFS or E-Tran). The SBA then issues an E-Tran number once the application is accepted into the SBA system. While receiving an E-Tran number is not a guarantee that an applicant will receive PPP funds, it does indicate a relatively good likelihood, since we understand that the funds for E-Tran loans were earmarked before the funds ran out.
Companies that are interested in the PPP but did not submit an application before April 16, or who have been informed that their application was not accepted in time, should still communicate with their lender on what they can do to (i) position themselves if and when additional funds are appropriated for the PPP or (ii) pursue possible alternative lending programs. Congress is currently debating whether to appropriate an additional $250 billion for the PPP, and while the timing on this is uncertain, the consensus appears to be that additional funds will ultimately be appropriated.
We have a team of people at Parker Poe who are tracking all of this constantly. For more information, please contact us or your regular Parker Poe contact. You can also find our other COVID-19 alerts here.