About 70 percent of U.S. small business owners have already tried to apply for an emergency loan through a new $349 billion program, according to an industry survey released Thursday.
More than half of the small businesses that have not yet applied plan to or are considering it, according to the National Federation of Independent Business (NFIB), a trade group for small and independent businesses.
A report by the trade group says the program, largely operated by banks, and a second operated by the SBA to provide immediate cash while struggling businesses wait on loan approvals “have yet to deliver the loans, frustrating small business owners who are in immediate need of financial support.”
The survey found that just over half of small businesses have applied for the SBA’s smaller disaster loan program but that just 4 percent had been approved.
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The survey reinforces the concerns of banks and small-business owners that the $349 billion Congress set aside for the Paycheck Protection Program will quickly be exhausted. Republicans and Democrats clashed on a proposed $250 billion increase in the program Thursday, leaving the path forward for additional federal intervention uncertain as the virus continues to tear through the economy.
The emergency small-business lending program got off to a rocky start, with most big banks saying they were not prepared to start processing applications when the program launched last Friday. But in less than a week, banks have said, they have received or processed applications worth at least $100 billion.
“Sometime next week #PPP will stop & no more #PPPloans will be made, leaving millions of #smallbusiness locked out,” Sen. Marco Rubio (R-Fla.) said Thursday on Twitter.
About 72 percent of those who tried to apply for a loan say they were successful in submitting an application, according to the survey. But since many banks are screening companies before supplying a formal application, it may be that some of those companies had completed only the first step, according to the trade group, which surveyed 884 small businesses Monday and Tuesday.
Most banks have limited applicants to existing customers, and the survey found that 1 percent of those who said they had successfully applied for a loan did not have an existing relationship with the lender.
The Paycheck Protection Program fund relies on banks to vet and approve loans of up to $10 million to small businesses with no more than 500 employees. The SBA backs the loans, which are offered at an ultralow interest rate. Small businesses can have the loans forgiven, meaning they will not have to pay it back, if they spend most of the money on retaining or rehiring employees.
About half of small-business owners had also applied for the Small Business Administration’s Economic Injury Disaster Loan, a long-standing SBA loan program managed by the government rather than the banks. That program has received extra firepower through legislation passed by Congress last month, the Cares Act, and is meant to give cash advances of up to $10,000 to businesses facing a short-term cash crunch.
Only 4 percent of those who applied had been approved, according to the survey. One percent were rejected. But most had not been given an answer.
None of the small businesses had received the loan or the emergency grant, according to the NFIB.
correction
An earlier version of this report mistakenly described Rubio as a senator from Texas. He represents Florida.
