The Paycheck Protection Program has run out of money.
With a May 31 deadline still a few weeks away — a date that is now mostly meaningless — the Small Business Administration confirmed reports that lenders who went online to submit new PPP applications were being rejected.
“After more than a year of operation and serving more than eight million small businesses, funding for the bi-partisan Paycheck Protection Program has been exhausted,” the SBA said in a prepared statement.
The May 31 deadline still has some relevance. The SBA statement said that “new qualifying applications will only be funded through Community Financial Institutions, financial lenders who serve underserved communities.”
However, the statement stressed that the SBA “will continue funding outstanding approved PPP applications.”
The current program targeted at keeping businesses open and workers employed kicked off in January 2021 and could be considered version 2 or version 3 of the PPP. The initial program launched in April 2020, ran out of money, was relaunched with new funding (which was considered either version 2 or an extension of the original program) and then was closed in August.
The current program was launched in January, extended from a March 31 deadline to the current closure date of May 31, and has now seen its funds exhausted.
Running out of money might be seen as a surprise given how the 2020 version ended. When the program closed in August, there was still money to be lent, raising questions about whether the 2021 round would find demand adequate. But the rate of loans earlier this year suggested that the cash might not make it until the end of May.
Total authorization for the program is roughly $809 billion. It had disbursed about $525 billion in the 2020 round, with a 2021 authorization of about $285 billion.
In the most recent status report issued by the SBA, for activity through May 2, the agency reported that this year it had disbursed $258.2 billion in 5.64 million loans.
Going back to April 2020, the program had disbursed $780.47 billion as of May 2, 2021. At the end of the 2020 activity in August, that figure was $525 billion. About $130 billion of authorized funds had not been tapped when that program closed in August.
In the 2021 version of PPP, key variations were that companies that got money the first time could get a second payment. But a company could not have more than 300 employees. The cap in the first program was 500.
The latest report through May 2 showed that in the 2021 version of PPP, the transportation and warehousing sector had received about $13.1 billion. That was just over 5% of the total lent this year. By contrast in 2020, that share was 3.34%.
Average loans into the sector this year were $22,881 across 571,573 loans. In the 2020 program, the average transportation and warehousing amount was $76,331 across 229,565 loans.
What’s striking is that the amount of money disbursed into the transportation and warehousing sector in the 2021 version of PPP was only about $4.4 billion less than 2020, a program that featured much larger limits. Several companies in the transportation and warehousing sector received the $10 million maximum in 2020. Specific amounts have not been disclosed yet for the 2021 program.
It’s also notable that at the beginning of the 2021 version, there were predictions that many transportation companies wouldn’t qualify this year, because they could not show a 25% year-on-year drop in revenue between a pre-pandemic quarter and one after the virus hit the globe, given the strength of the trucking market