New applications are suspended for the Paycheck Protection Program for small businesses after its fund ran out Thursday, unless and until congressional Democrats and Republicans settle their differences and pass a $250 billion expansion.
Why it matters: For many small businesses, this moratorium on a key coronavirus stimulus package could prove lethal.
President Trump has repeatedly boasted that PPP has been wildly successful. And he's right, despite the many glitches that he's loathe to acknowledge.
- The CARES Act wasn't even law at this time three weeks ago. Standing up and executing such a massive program, which involved over 1.5 million small businesses and around 5,000 lenders, in such a short amount of time is an extraordinary accomplishment.
It's also true that there have been inequities.
- Some small businesses were at a disadvantage if they picked "the wrong" bank, or didn't have the right relationship with that bank.
- Small businesses with in-house finance or accounting professionals likely had a leg up. Same goes for ones with savvy institutional investors, depending on what their lawyers told them about affiliation rules, and that will engender understandable bitterness from bootstrapped mom-and-pops.
- If there's still $250 billion of demand, that means there are well over 1 million small businesses in need (based on the initial pot's average loan size).
Congress is playing chicken with people's livelihoods.
- Congressional Democrats have a strong case that more funding is needed for hospitals and state/local governments, and that congressional Republicans are being improperly intransigent on tying those monies to PPP+.
- But now they're letting the perfect be the enemy of the good, and it's bound to cause widespread pain.
The bottom line: If that $250 billion doesn't materialize by Monday, then PPP may be remembered as much for those it left behind as for those it helped.
