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April 07, 2021

PPP Running Out of Funds

Promo firms that need support from the relief program should hurry up and apply, some experts say.

By  Christopher Ruvo

Struggling promotional products companies that want to secure a loan through the Paycheck Protection Program (PPP) better act fast and apply.

That, at least, is the advice of experts who note that the small business relief program could run out of funding before its final date for loan applications – May 31. The U.S. Small Business Administration (SBA), which administers the PPP, recently cautioned lawmakers that funds could dry up some time in April.

“The businesses don’t know that they have to hurry up, but they better hurry up,” Erik Asgeirsson, president and CEO of CPA.com, the business and technology arm of the American Institute of CPAs, told CNBC. He believes lenders, which disburse the loans that are backed by the SBA, could start to close their platforms as money dwindles. “It’s going to make people panic,” Asgeirsson said.

Word on the fast-diminishing funds comes shortly after Congress and President Joe Biden extended the PPP application period from March 31 to May 31.

The PPP is a federal program that allows businesses to receive low-interest loans – completely forgivable if certain parameters are met – to pay for payroll and other costs. The funding has aimed to save jobs and help keep small businesses afloat amid the economic ravages of the COVID-19 pandemic.

PPP launched as part of the $2.2 trillion CARES Act in spring 2020. Through March 28, 2021, 8,728,494 loans totaling more than $734 billion had been approved through the program, according to SBA data. Over several rounds of funding, the federal government has made nearly $1 trillion in PPP loans available.

While some economic news has turned more positive of late, small businesses across the United States continue to struggle amid the challenges posed by fallout from the COVID-19 pandemic. That’s kept demand for the PPP high. According to an April 5 report in Politico, the need for support has left the PPP with just $66 billion in funding as of last week.

Some small business advocates, including the American Institute of CPAs, want Congress to provide additional funding for the PPP. “This is unfair for the smallest businesses to be shut out in the final hours," Asgeirsson told Politico. “A lot of false hopes were raised.”

The federal government approved $284 billion in new PPP loans shortly before the turn of the year and another $7.25 billion in Biden’s recently approved $1.9 trillion American Rescue plan. Customers Bank, which Politico described as one of the most prolific PPP lenders, told that media outlet that another $150 billion would be adequate to meet demand for PPP. That would put the program over $1 trillion in total funds made available.

As of this writing, it wasn’t clear if Congress would pursue pumping more funds into the program.

Promotional products firms relied on the PPP in 2020 to help them through periods when business had effectively disappeared amid COVID-driven shutdowns and related factors. Demand for the PPP has continued to be strong in promo in 2021.

“Our revenue fell about 20% last year,” John Rusher, partner at Myrtle Beach, SC-based supplier Standard Plastic Card Solutions (asi/88999) told ASI Media. “It was especially bad in the early stages when hotels and restaurants totally shut down, as they are our bread and butter. The PPP was a big boost to help us recover our losses and keep things going. It also made us grateful because we were able to not only stay open, but also help others in our community through donations to the local food bank.”