I don't mean to beat the dead horse known as the Paycheck Protection Program, but you know things are bad when most businesses stop applying for funds.
You may recall that the first round of PPP funding appropriated by Congress was spoken for very quickly, but bank representatives who spoke to Reuters say applications for loans have completely dried up.
Moreover, even some who were approved for loans aren't touching the money.
Nationally the program remains active. But data from the Small Business Administration shows net weekly PPP lending has actually been negative since mid-May, as fewer firms applied for loans, and some borrowers returned funds.
All told, the SBA says it had approved $512.2 billion in PPP loans as of May 21. That’s nearly $150 billion less than the $660 billion allocated to the program, which was designed to keep Americans on company payrolls and off unemployment assistance.
Many of Bank of the West’s PPP borrowers haven’t touched their PPP loan deposits, which total $87 million, [bank president Cindy Blankenship] says, partly because they are confused about the terms. “I think it’s a mixture of uncertainty and anxiety and fear, and the uncontrollable factor about employment and rehiring.”
The fact that the Treasury was still rewriting the rules for PPP loans as recently as a couple weeks ago has certainly been a factor, but I wonder if the program just doesn't make sense anymore.
I mean, the PPP program never made much sense to begin with in my opinion, but does it at all when there's no reason to retain employees? When there's nothing to go back to?
To put it another way -- there's no reason to apply for a loan to keep employees on a payroll when your business is permanently closing. We don't have a good idea yet of just how many businesses will permanently close or already have, but the number is likely very high.
The Small Business Administration does not disclose how many jobs were temporarily saved by the Paycheck Protection Program, but even if it were their policy to do so I doubt they actually know. In any case, I have frequently-expressed doubts that this program benefited average workers at large any more than another stimulus check would have. Stimulus checks are distributed directly to people while this program still has $150 billion sitting in banks figuratively collecting dust.