On March 27, President Donald J. Trump signed the “Coronavirus Aid, Relief and Economic Security Act” (CARES Act) into law with provisions to provide financially distressed consumers and small businesses greater access to bankruptcy relief. The legislative package provides a $2 trillion economic stimulus for U.S. industries and citizens faced with the challenges of the COVID-19 coronavirus.
The CARES Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection program (PPP), the initiative provides 100% federally guaranteed loans to small businesses who maintain their payroll during this emergency.
After the passage of the CARES Act, the U.S. Treasury and the Small Business Administration (SBA) processed more than 14 years worth of loans in less than 14 days, many through the PPP. By law, the SBA is not able to issue new loan approvals once programs experience a lapse in appropriations. That lapse occurred on April 16 after the initial $349 billion in PPP had been exhausted. On April 23, the House passed the newest federal stimulus package allocating $310 billion to replenish PPP. The Senate passed the measure earlier in the week. Banks are warning that loan application requests already exceed new funding levels.
“It’s been projected that these funds are going to run out within 36 hours after they’re released,” said Claudia Larson, government relations director at the National Milk Producers Federation.