Student blog: As the CARES Act runs out of money, what next for small business?

By Maddy Scannell, Ranie Lin and Shrey Agarwal

Research Interns, McNair Center for Entrepreneurship and Economic Growth

The CARES Act and the PPP

In response to the economic turmoil associated with the coronavirus pandemic, on March 27 Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Among other provisions, the CARES Act provides relief programs for small businesses, including the Paycheck Protection Program (PPP), expansion of the Small Business Administration’s Economic Injury Disaster Loan (EIDL) program and updated business tax provisions. [1]

However, by April 16, the relief money was all gone. On that date the Small Business Administration (SBA) announced that the $349 billion allocated for PPP loans and $17 billion for the EIDL program had all been claimed. [2] Because of this “lapse in appropriations,” as the SBA termed it, PPP and EIDL applications are no longer being accepted. Nearly 1.7 million PPP applications were approved by the SBA before the fund was exhausted. [3]

The PPP was intended to be the primary source of financial assistance for small businesses. It allows firms with fewer than 50 employees to obtain loans that may be forgiven if the funds are used for approved purposes such as payroll and rent. [4]

Under the PPP, loan applications were processed on a first-come, first-served basis. As a result, the American Bankers Association (ABA) reported that loans totaling $205 billion were processed in just the first week (April 6-12). [5]

Some small businesses left out or still waiting

This scramble for funds may have disadvantaged less-established businesses. Early reports indicate that the most rapid approvals were for businesses with “good, existing relationships with a lender.” [6]

Meanwhile, the fact that the federal allocation is officially depleted does not mean that firms have actually received those funds. While 70% of small businesses have attempted to apply for loans, a significantly smaller portion have actually received the funds. [7] Problems include inadequate guidance given to small banks related to loan closing and the SBA’s loan portal (E-Tran) requiring some banks to input borrower information manually. [8] The rush of applicants has overwhelmed the banking system, meaning the money intended to be available immediately may not be accessible to businesses for weeks. [9] Since nearly half of small businesses lack the cash reserves to stay afloat more than two months (or even two weeks, for the smallest firms), the lag between closing the loan and receiving funds has added a significant amount of pressure. [10]

Congressional response

In response, both parties of Congress have called for an additional $250 billion in small business assistance. However, lawmakers are at an impasse over the details. Points of disagreement include whether new appropriations should simply extend the PPP or be allocated to new initiatives, whether funding for state and local governments and hospitals should be included, and how new relief could be structured to enable firms without banking relationships to receive aid, for example, through additional funding for SBA disaster assistance grants. [11]

A potentially hopeful sign is that Senators Cory Booker (D-NJ) and Steve Daines (R-MT) proposed a $50 billion Small Business Local Relief Fund on April 16 to provide additional aid to small enterprises left out of the PPP. [12] Though much smaller than the currently stalled proposals, this effort “would allocate funding to cities, counties and states to seed and scale local relief funds that are explicitly targeted towards very small businesses” — specifically firms “with less than 20 employees and those located in low-income communities.” [13]


The initial relief appropriations of the CARES Act have been exhausted, but the needs of small business remain massive and urgent. Congress should move quickly but thoughtfully to approve additional funding for small business assistance, with improved procedures for approval and allocation.


[1] “Frustration mounts on Main Street as entrepreneurs wait on banks and SBA for much-needed funding,” CNBC, April 9, 2020,

[2] “Federal loan money intended for small businesses is all gone, SBA says”, Newsday, April 16, 2020,

[3] “The Paycheck Protection Program Has Reached Its $350 Billion Cap,” Inc., updated April 17, 2020,

[4] “Congress Approves Economic Relief Plan for Individuals and Businesses,” The Tax Foundation, April 1, 2020,

[5] “$205 Billion of the $350 Billion Appropriated for PPP Loans Has Been Claimed,” Entrepreneur, April 13, 2020,;

[6] “Frustration Mounts,” supra n.1.

[7] “Coronavirus PPP loans leave small firms confused, wary and rushing to secure cash to survive,” USA Today, updated April 14, 2020,

[8] “Small-Business Loans Face Delays Even as Coronavirus Program Expands,” The Wall Street Journal, April 10, 2020,

[9] Ibid.

[10] “Coronavirus PPP loans leave small firms confused,” supra n.7.

[11] “Pelosi and Schumer push for emergency coronavirus bill with at least $500 billion more in aid,” CNBC, April 8, 2020,; “Senate adjourns until Monday after Democrats block McConnell’s bid to add $250 billion in small business aid,” CNBC, April 9, 2020,

[12] “Financial Assistance Tracker for Businesses,” Inc., updated April 17, 2020,

[13] Letter of Sens. Booker and Daines to Senate Majority and Minority Leaders, April 16, 2020,