The marquee loan program for small businesses struggling to survive the coronavirus pandemic has exhausted more than half of its funding in one week.
Federal officials announced Sunday that $175.7 billion in federal guarantees for Paycheck Protection Program loans were used to back 2.2 million loans from banks and other private lenders between April 27 and May 1.
The PPP reopened April 27 with $310 billion in loan guarantees after exhausting $349 billion in guarantees April 3-16.
Banks have been criticized for favoring public companies and longtime customers over small businesses. The U.S. Small Business Administration, which approves the loan guarantees, came under fire last week for limiting the number of loan applications a lender may submit for SBA approval at any given time.
SBA Administrator Jovita Carranza and U.S. Treasury Secretary Steven Mnuchin said the second round of PPP has seen more funds going to small businesses. They said the average loan amount is $79,457 compared with $206,022 in the first round.
“The program is broadly based and assisting the smallest of small businesses,” Carranza and Mnuchin said in a statement on Sunday.
They noted 15% of the second-round federal loan guarantees have been used by small lenders, including nonbanks such as community development financial institutions, which focus on aiding businesses in poor neighborhoods. For PPP 2.0, Congress set aside $60 billion in guarantees for use by small lenders.
Still, the watchdog group Accountable.US in Washington called the PPP "a failure" on Sunday, alleging poor oversight allows big corporations to secure loans.
"The program continues to prioritize large, well-connected corporations and millions of small businesses may not survive the pandemic," said Kyle Herrig, the group's president.
PPP loans generally go to businesses with 500 or fewer employees and are for up to $10 million per applicant. The interest rate is 1% with a two-year term and the entire amount is forgivable in some instances. Newsday has secured a $10 million PPP loan.
In New York State, $17.6 billion has been distributed in 164,271 loans during PPP's second round as of May 1. The average loan amount is $107,188 compared with $250,949 in the first round.
In PPP 1.0, New York businesses secured the third-most funding after California and Texas: $20 billion in 81,075 loans, according to SBA. The agency cannot yet provide data for Long Island, a spokesman said Sunday.
Separately, Larry Kudlow, director of the White House's National Economic Council, said the administration would consider a third round of the PPP. "I don't want to rule it out," he said on CNN's "State of the Union" program. "We waited a little bit too long, I thought, when the last tranche ran out. Let's not make the same mistake again. We will be looking at that."