Small business loan program on hold after hitting $350 billion limit in just two weeks amid coronavirus crisis

A sign alerts customers that a business in Queens, which has one of the highest infection rates of coronavirus in the nation, is closed because of the pandemic outbreak.(Spencer Platt/Getty Images)

The government’s small business loan program stopped accepting applications Thursday after maxing out $350 billion in coronavirus emergency funding in just two weeks, leaving many American brick-and-mortar companies without a lifeline as the U.S. economy continues to crash.

The Small Business Administration, which administers the so-called Paycheck Protection Program, said on its website that it couldn’t accept new claims “based on available appropriations.”

The SBA said it had approved more than 1.6 million loan claims from small businesses since the COVID-19 program started April 3.

The $350 billion initiative, which offers forgivable loans to businesses with less than 500 employees who keep workers on the payroll amid the pandemic, was a key piece of the $2.2 trillion stimulus bill signed into law last month by President Trump.

But, with states implementing stay-at-home orders that are forcing thousands of businesses to close up shop, the program rapidly ran dry, and Congress does not appear likely to promptly replenish its coffers.

Republicans and the Trump administration have proposed funneling another $250 billion into the program.

Democrats aren’t necessarily against that proposed cash infusion, but want any such appropriation to also include more emergency funding for hospitals and state governments facing enormous budget shortfalls because of the virus.

“The question is of the Republicans: Why are you ignoring your state?” House Speaker Nancy Pelosi (D-Calif.) said in a conference call with reporters. “How can we ignore their pleas for help, their cries for help, when they are on the front-lines? I turn the question on them: When we all know we want to help small businesses, why would you turn your back on the hospitals?”

Adding to the economic anxiety, the Labor Department reported Thursday that another 5.2 million Americans filed for unemployment aid last week, meaning at least 22 million workers have been forced out of their jobs since the coronavirus outbreak hit the U.S.

Trump was expected to unveil a plan to reopen the U.S. economy on Thursday afternoon, even as health experts and governors are wary about rescinding stay-at-home orders too soon, with the virus now having killed nearly 30,000 people in the country.

Pelosi and other Democrats are expected to continue negotiations on the Paycheck Protection Program with Treasury Secretary Steven Mnuchin, who has been a point-person on stimulus issues for Trump and congressional Republicans.

Earlier in the day, Trump lashed out against Pelosi over the small business loan program freeze, calling her “a weak and pathetic puppet” controlled by “the Radical Left.”

“Democrats are blocking additional funding for the popular Paycheck Protection Program,” Trump tweeted. “They are killing American small businesses. Stop playing politics Dems!”