The Paycheck Protection Program has run out of money and only a small number of new loan applications are being approved, officials said on Wednesday.
"After more than a year of operation and serving more than eight million small businesses, funding for the bipartisan Paycheck Protection Program has been exhausted," said the U.S. Small Business Administration, which oversees the PPP.
WHAT TO KNOW
- The Paycheck Protection Program, or PPP, has run out of money.
- The federally guaranteed loans have an interest rate of 1%.
- The loans may be forgiven if the terms are met.
- NYS borrowers received the second-largest amount of loans after California borrowers.
SBA said outstanding loan applications will be processed. "But new qualifying applications will only be funded through Community Development Financial Institutions," the agency said.
CDFIs are nonbank lenders that aid the smallest businesses, some of which are owned by women, veterans or members of minority groups or are in poor neighborhoods. SBA said it will no longer accept loan applications from banks.
The winding down of the PPP won't affect customers of Dime Community Bank, one of the program's most active participants on Long Island.
"Most of our customers have been funded already," said CEO Kevin M. O'Connor. "We have seen a significant reduction in applications over the last month or so."
Dime has made more than $2 billion in PPP loans on the Island and in New York City.
Washington's marquee COVID-19 relief program for businesses and nonprofits consists of federally guaranteed loans of up to $10 million for first-time borrowers and $2 million for second-time borrowers. The loans have an interest rate of 1% and are forgivable if the terms are met.
The PPP was begun a year ago and $291 billion in guarantees were approved by Congress in December and March. The application deadline was extended to May 31 from March 31.
SBA approved 5.6 million loans, totaling $258 billion between January, when the PPP's second phase began, and May 2.
In New York State, more than 352,730 loans were approved in the period, totaling $21.4 billion — the second most in the country after California, according to agency records.
The industries receiving the most loans nationwide are hotels/restaurants, construction, health care/social services, and professional/technical services. The average loan is $46,000.
The PPP's first phase, between April 3 and August 8 of last year, saw 5.2 million loans made across the country, totaling $521 billion. Newsday secured a $10 million loan in April of last year.
PPP 1.0 closed last year with about $134 billion in unused loan guarantees.
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