By Michelle Price
WASHINGTON (Reuters) - A $350 billion emergency U.S. loan program to help small businesses keep workers on their payrolls amid the novel coronavirus disruption has run out of funds, the U.S. Small Business Administration said on Thursday.
That has left thousands of small business across the country, which have been forced to shut down in order to stem the outbreak, without badly needed funds to keep them afloat.
"The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding," the SBA said on its website, adding that as a result it could not enroll new lenders in the program for the time being.
The SBA said in an email that nearly 5,000 banks had made roughly 1.6 million loans under the scheme, which was part of a $2.3 trillion congressional stimulus package passed last month to combat the economic damage caused by the virus.
Major lenders, including Wells Fargo (NYSE:WFC), JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC), have been inundated with hundreds of thousands of loan applications, far more than they have been able to process, according to the banks and Washington trade groups.
The Trump administration has been pressing Congress to approve an extra $250 billion for the program, which provides small businesses with guaranteed bank loans that can be forgiven provided most of the money is used for payroll costs.
But lawmakers have yet to agree on legislation, as Democrats push to include other provisions to ensure financing for minority-owned and rural businesses and assistance for hospitals, state and local governments and the poor. Republicans oppose the additional measures.
Washington-based banking groups have written to Congress multiple times calling for lawmakers to end the deadlock and have asked that lenders be able to continue processing applications so they are ready to disburse the funds once they are approved by Congress.
"Small businesses are continuing to submit loan applications and existing applications are still pending SBA approval," Richard Hunt, president and chief executive of the Consumer Bankers Association, said in a statement on Thursday.
"The millions of men and women who work at America’s small businesses and their families are battling a health crisis while also facing an economic crisis unless Congress authorizes additional funds.”
Worried that the funds are not being fairly distributed, the Independent Community Bankers of America, a powerful Washington group, has been pushing for 25% of any new funds to be earmarked for community banks with $50 billion or less in assets.
The industry has also called for changes to the scheme's rules and terms, including waiving certain lending compliance checks that they say have slowed their ability to get funds out the door.