The federal government’s signature aid effort for small businesses ravaged by the coronavirus pandemic is out of money and has stopped accepting most new applications, reports the Hill.
The $961 billion Paycheck Protection Program was scheduled to end on May 31, but the Small Business Administration (SBA) sent out a notice to lenders on Friday saying that “due to the high volume of originations today, the portal will be closing for new originations.”
The SBA said it had received more than 125,000 applications in the 24 hours before it notified lenders of the PPP’s closing.
While many had predicted that the program would run out of funds before its May 31 application deadline, the exact timing came as a surprise to many lenders.
“It is our understanding that lenders are now getting a message through the portal that loans cannot be originated,” the National Association of Government Guaranteed Lenders, a trade group, wrote in an alert to its members Tuesday evening. “The P.P.P. general fund is closed to new applications.”
The PPP money was frequently targeted by swindlers making fraudulent loan applications. Fake entities across multiple states were able to obtain PPP loans worth millions of dollars by misrepresenting the number of employees they had or even the very existence of their businesses.
In early May, a California man, Mustafa Qadiri, was arrested on charges of obtaining $5 million worth of PPP loans through fraudulent means. Qadiri allegedly used the money to buy luxury cars, including a Lamborghini.
Though the program has closed, the Journal noted that the SBA has at least another month to process previously filed applications.
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