SBA has formally announced that both the PPP and EIDL funds have been exhausted and that SBA is unable to accept new applications for either program:
“Lapse in Appropriations Notice: 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.”
One good sign is that Wells Fargo has said that it is “hopeful” for additional funds and is thus continuing to take applications “In anticipation of” those additional funds in order to have them ready for submission to SBA if and when the portal reopens:
You may have heard that the U.S. Small Business Administration (SBA) has run out of money to fund PPP loans, and we realize this may be causing you frustration and concern. Given the magnitude of the crisis the country is facing, we are hopeful that Congress will approve additional funds for the PPP. In anticipation of additional approved funds, Wells Fargo continues to take and prepare customers’ PPP loan applications for submission to the SBA.
The Community Bankers association reports that more than 700,000 applications are “in limbo” as customers wait to hear whether their loan was approved by SBA prior to the funds being exhausted. They are also quoted as saying demand for PPP loans could exceed $1 trillion, which is in line with our back-of-the-envelope math below. So now, the focus turns to Congress and perhaps the Fed Main Street Liquidity Program. In a case of unfortunate political timing, the Fed did announce this morning that the PPP Liquidity Facility is now “fully operational”.
While the program has been far from perfect, remember that in 2019, SBA lenders closed 63,000 loans for a total of $28 billion. Consider that the CARES Act was signed into law just 20 days ago, and lenders had one week to set up their PPP programs to begin taking applications on April 3. In the 13 days since the PPP portal opened, SBA processed more than 1.6 millionloans for a total of $349 billion. That means that, the PPP lenders and SBA on average:
- Each day, processed nearly TWICE the number of loans that they processed in all of 2019 and
- Each day since funding began late last week, funded loans for more than 1.5X the entire SBA principal mount funded in all of 2019.
That’s a staggering increase. Despite the challenges, valid criticisms and unfortunately insufficient appropriations, this pace and breadth of the PPP funding remains an impressive achievement.
Our team is grateful to have been able to help you and our other clients analyze these issues and, in most cases, find ways to confirm eligibility to apply for a PPP loan in order to obtain funding to help keep paychecks flowing to your employees. Thank you for the opportunity to work with you and your teams.
We will continue to monitor the situation and report back as events develop, including with respect to forgiveness and other guidance.