Less than 40 percent of small businesses have received support from the Treasury Department and Small Business Administration’s (SBA) emergency coronavirus lending initiative, according to Census Bureau data released Thursday.
While 74.9 percent of respondents to the Census Bureau’s survey of small businesses applied for a forgivable loan through the Paycheck Protection Program (PPP), only 38.1 percent received aid.
The PPP was created through the Coronavirus Aid, Relief and Economic Security (CARES) Act to help small businesses closed or suffering during the pandemic retain their employees and keep them off of unemployment insurance. The program offers loans intended to cover eight weeks of payroll and 25 percent of overhead costs, and can be forgiven up to 100 percent if spent according to those terms.
The SBA has approved more than 4.23 million PPP loans for a total of roughly $542 billion between two rounds, according to data from the administration. The SBA has depleted roughly $193.7 billion of an additional $310 billion in funding from Congress after the SBA distributed all $349 billion originally allocated for the program.
While the PPP has received wide bipartisan support, the program has also been marked by frequent controversy, confusion, and concern about the restrictive terms of the loans it offers.
A bipartisan group of lawmakers, along with businessowners and advocates, have asked Treasury Secretary Steven Mnuchin and the SBA to allow PPP recipients to spend more of their loans on overhead and hold onto the money longer if they’ve not been able to reopen.
Mnuchin has largely brushed off those concerns, insisting that the program is working largely as designed by Congress, but he agreed to would work with lawmakers on a bipartisan fix. Lawmakers counter that Mnuchin and the SBA have the authority to amend the terms on their own through new regulations.
Democrats have also spoken out about the far lower rates of PPP approval for some of the smallest U.S. businesses, including those owned by people of color and women. House Small Business Committee Chairwoman Nydia Velázquez (D-N.Y.) and Sen. Elizabeth Warren (D-Mass.) have asked the SBA’s internal watchdog to investigate the distribution of PPP loans and a group of news outlets have sued the SBA for detailed loan disbursement breakdowns.