A new Lending program for Small business maxed out Thursday morning and Stopped accepting new application for loans. All banks participating in the SBA loan programs have effectively stopped loaning money. Any replenishment of these Funds seems unlikely to happen at the moment as Congress is bitterly divided how to move forward as the nation plunged into unemployment levels not seen since the great depression.
The Small Business Administration said on its website that the agency “is unable to accept new application … based on available appropriations funding”
This leaves many business who submitted an application and waiting on funds to evaporate right in front of them overnight – literately. The economy continues to crumble and lawmakers are scattered all over the country advancing conflicting proposals and bickering.
The government has not released data showing how much of that cash has been disbursed. It unclear how many firms have secured new loans however its estimated that only a small portion of firms have gotten any money from the program, though it appears to be just a fraction of the 30 million small businesses in the United States.
The SBA approved 1,661,397 loans from 4,975 lenders before it was exhausted. Due to bottleneck issues between the agency and banks, only a fraction of those have actually been credited to customers’ bank accounts.
This week, JPMorgan Chase said it has funded $9.3 billion of the loans so far and was still processing 300,000 applications seeking $36 billion. Bank of America says it has received applications seeking more than $40 billion in loans.
The Federal Reserve eased restrictions it had put on Wells Fargo’s growth after the San Francisco-based bank said it had received applications worth more than $10 billion in loans in just a few days.
The PPP program reached its funding limit while a separate program, called Economic Injury Disaster Loans, is also running short on funds. The funding shortfall has already caused that program to slash the size of loans it gives to small businesses, SBA officials say.
In a statement Wednesday, Mnuchin and SBA Administrator Jovita Carranza warned that a lapse in appropriations threatens to further disrupt the loan programs.
Small-business owners have few options now that the fund is dry. Many businesses whose applications were approved before the funding ran dry are in limbo, too. The SBA has not specified how much of the allocated $350 billion has actually been transferred to owners’ bank accounts, and many businesses haven’t seen their loans.
The White House administration has requested another $250 billion for the program, but a political clash between Democrats and Republicans has let the funding lapse. Democrats have insisted that part of the funding be walled off for lenders that service minority-owned businesses, and have push for another $250 billion for hard-hit hospitals on the frontlines of the pandemic, states and local governments suffering from revenue loss, and a 15 percent increase in food stamps.
In Summary
Because of the bitter divide, many firms are now considering bankruptcy protection as their next best option. The government relief seems tepid at best and protecting your your business, your home, and your family has never been more important. Contacting one of our top bankruptcy attorneys for a free consultation by phone to understand your options.
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We understand debt settlement and bankruptcy is a challenging topic to face both financially and emotionally. The processes can become very complicated in a system that is difficult to navigate and frequently changes. Consulting with a good lawyer as soon as possible is incredibly important to the success of your debt settlement or bankruptcy strategy. At JLG Lawyers we offer solutions to help advise you and answer questions all the way to a full attorney handled case. Contact us now for a free case review and strategy session.
JLG Lawyers and Michael Jaurigue, Esq. are located in Glendale, California and specialize in debt settlement and bankruptcy matters. Michael Jaurigue is a UCLA and Berkeley Law graduate and has been practicing law for 20 years in Los Angeles and worked at Sheppard, Mullin, Richter, and Hampton representing several Fortune 100 clients prior to forming his own firm 10 years ago. JLG Lawyers is located at 300 W Glenoaks Blvd. Suite 300, Glendale, California 91202. 818-630-7280.