The Paycheck Protection Program has run out of money for most borrowers before its planned May 31 end, the Small Business Administration said.
Going forward, the program will only accept new applications from community financial institutions, which typically serve minority borrowers, as about $8 billion in funding was set aside for such businesses.
The exhaustion of funds, which was announced Tuesday, comes just weeks after the PPP was extended through the end of May to allow borrowers more time to apply for the forgivable loans. While many lenders and borrowers thought that the program would likely run out of money ahead of the May 31 deadline, the exact timing wasn’t known.
“We did get caught off guard a little bit,” said Sam Sidhu, vice chairman and chief operating officer at Customers Bank, a subsidiary of West Reading, Pennsylvania-based Customers Bancorp. The bank, which was processing about 20,000 PPP loans per week, still has thousands of borrowers who are now stuck in the pipeline, Sidhu said.
Other lenders also have backlogs awaiting SBA approval, and more applications they could have submitted.
“Everybody’s going to be waiting now to see what the SBA does, if anything,” said Hurn.