SAN FRANCISCO/WASHINGTON: When the U.S. government first rolled out forgivable loans to small businesses in early April under the Paycheck Protection Program, loan officers at Bank of the West in Grapevine, Texas worked nights and weekends to process a tsunami of applications.
But since those first few frantic weeks, demand has “just dried up,“ said bank president Cindy Blankenship. On May 15 the bank stopped taking applications for PPP loans.
Nationally the program remains active. But data from the Small Business Administration shows net weekly PPP lending has actually been negative since mid-May, as fewer firms applied for loans, and some borrowers returned funds.
All told, the SBA says it had approved $512.2 billion in PPP loans as of May 21. That’s nearly $150 billion less than the $660 billion allocated to the program, which was designed to keep Americans on company payrolls and off unemployment assistance.
Many of Bank of the West’s PPP borrowers haven’t touched their PPP loan deposits, which total $87 million, Blankenship says, partly because they are confused about the terms. “I think it’s a mixture of uncertainty and anxiety and fear, and the uncontrollable factor about employment and rehiring.”
The money left unborrowed and unspent under the program - a flagship of Congress’ $2.9 trillion effort to cushion the economic crush of the coronavirus pandemic - represents a lost opportunity. Businesses were supposed to use it to retain workers, but may have been laying them off instead of tapping the money.
Some 38.6 million people have filed for unemployment insurance since the crisis began, and the unemployment rate is expected to near or surpass the 25% record reached in the Great Depression.
The SBA does not provide estimates of how many jobs have been protected by the 4.4 million loans made to date under the program.
The agency did not respond to Reuters’ requests for comment. -Reuters
