Retailers hoping for federal relief under the $2.2 trillion CARES Act will have to wait, as funds allocated have apparently run dry.

Two Small Business Administration programs designed to help businesses weather the pandemic — the Paycheck Protection Program and the Economic Injury Disaster Loan — have apparently run out of funds.

“Late last night, early this morning, the funds have probably all been earmarked and accounted for,” John Fekete, a partner at Baratz & Associates P.A., a Marlton, New Jersey-based accounting firm, said Thursday morning.

Fekete said he has “a fair amount” of clients that have gotten PPP loans approved, although none have yet received funding. Under the PPP, borrowers with less than 500 employees can apply for a loan up to $10 million loan that is potentially forgivable.

“If you get a loan number, the money’s been earmarked,” he said. “I have not had any clients that actually have gotten the funds wired into their account.” He said once a retailer receives what’s known as an “E-tran” number, the money is supposed to be wired within 10 days.

“We’re sort of in this waiting period right now to see if the money is actually going to get in there,” Fekete said.

Accountant: Don’t give up hope

Small businesses (those with less than 500 employees) that have not applied for a PPP loan yet should not consider themselves out of the picture, Fekete said, depending on when the government approves additional funds.

“Right now, Congress is talking about adding $250 billion to the $350 (billion) that was made available,” he said. It sounds like it’s going to get done after some politicking, maybe early next week. I assume once they do that, anyone that’s been shut out now will have another opportunity to apply for it.”

Fekete encouraged small retailers to prepare the necessary paperwork and speak to their bank rather than going onto the SBA website to apply for a loan. The PPP loans are being managed by the banks. 

Business owners who have contacts at small community banks should work with those banks, he said, since smaller banks participating in the PPP are acting faster than large ones.

“These big banks are slow to process, just because of the sheer volume that they get, whereas the smaller community banks have less paperwork to process,” he said. “They can get things done a lot quicker.”

Fekete said he is optimistic additional funds will be approved. “It’s just a matter of the Republicans and Democrats playing their games and finally getting it through,” he said.

As of Wednesday evening, the SBA approved more than 1.4 million loans totaling $315 billion under the PPP, according to a report in The New York Times. 

Political gridlock

The Trump Administration and Republicans in Congress have sought a cash infusion for the program, but Democrats have asked assurances the funds would go to companies traditionally disadvantaged in the lending market, including minority owned businesses, according to The New York Times. Democrats also want funds to be available to state and local governments, food stamp recipients and hospitals. Republicans have objected to these additional stipulations as part of the initial refunding, claiming it should be considered later.

While more than a million loan applications have been approved, many banks are still waiting for greater clarity over liability if new loan applicants don’t follow PPP rules and for more guidance on how to process applications for self-employed businesspeople and independent contractors, according to a Marketwatch report. 

In addition, SBA data indicates much of the approved funds have been approved for the larger small businesses. The average loan size approved was $239,152 according to data it released Tuesday.

Emergency disaster loans also in peril

Businesses with 500 to 10,000 employees seeking relief will also have to wait.

The SBA announced on its website that it is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including the EIDL advances) based on available appropriations funding. Applicants who have already submitted their EIDL applications will continue to be processed on a first-come, first-served basis.

“It looks like that money has been exhausted as well,” Fekete said.

Under the direct lending loans for these mid-size businesses, companies could apply for a loan up to $2 million. And while the loan is not potentially forgivable like the PPP loan, borrowers could receive a $10,000 grant that did not have to be repaid.

The $10,000 grant has been reduced to $1,000 per employee, according to an email to EIDL loan applicants. Loggins Kern & McCombs, a Jonesboro, Georgia based accounting firm, posted a copy of the email the SBA sent to some of its clients which says that to ensure the greatest number of applicants receive assistance, the advance will provide $1,000 per employee up to $10,000.

A couple of his clients got the $10,000 grants, Fekete said. “That was advertised that you were going to get $10,000 within three days,” he said. “I had two or three clients where that actually did happen, but that’s about it. Many more applied and they’re still waiting.”

Will Congress act fast?

Meanwhile, businesses are urging the government to act fast on approving more funding.

The Electronics Transactions Association, whose members — banks and fintech lenders — have helped tens of thousands of American small business owners access billions of dollars under the PPP, has urged Congress to act swiftly to allocate additional funds.

“As the PPP has reached the limit set by Congress, there are thousands of small businesses that still need access to PPP funds,” Jodie Kelley, ETA CEO, said in a statement. “We urge Congress to act swiftly to allocate additional funds to the PPP.”