US capping how much banks can lend as part of coronavirus emergency program
The Trump administration will impose limits on how much individual banks can lend under the Paycheck Protection Program (PPP) due to the program’s high demand among businesses seeking relief from effects of the coronavirus pandemic.
Reuters reported Sunday that the Small Business Administration will limit individual banks and lenders to 10 percent of the program’s overall funding, or $60 billion, and direct financial institutions to slow the pace of applications for the program.
PPP funding will once again become available Monday morning as the program received funding from Congress in a stimulus bill passed this week and signed into law by President Trump. The program is expected to see a high number of applicants again, as $349 billion in funding for the PPP ran out shortly after becoming available earlier this month.
Previous management of the program has also faced criticism due to the relatively low number of small businesses that were able to secure loans, while larger businesses saw more success.
Some companies that were approved for funding in the previous round, including burger chain Shake Shack, later announced that they would turn down the payments.
Lawmakers involved with the program’s design have pointed to the desire to see stimulus funds dispersed quickly as a reason for the program’s relative failure to aid most small businesses.
“In emergencies, mistakes are going to be made. But the biggest mistake you can make is to move too slowly,” Sen. Marco Rubio (R-Fla.), chairman of the Senate Small Business and Entrepreneurship Committee, said on CNBC. “The goal here is to get the money out quickly. So we sort of erred on the side of expediency.”