More coronavirus aid to small businesses is coming, but it might not be enough

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WASHINGTON -- The House is expected to approve an additional $320 billion for the Paycheck Protection Program on Thursday, amid concerns by lenders and small-business advocates that the funding still won't be enough to meet demand for the coronavirus aid.

Banks, credit unions and community-based lenders say they have a backlog of applications for the PPP loans, after the roughly $350 billion allocated for the program ran out last week.

"We believe our members have as many applications pending as they submitted during the initial round of funding, and the funds Congress is set to approve this week will likely all be used," a spokesman for the Consumer Bankers Association, a trade group for retail banks, said Wednesday.

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Lendistry, a Los Angeles-based community development financial institution, said it has about $120 million of loans in its pipeline for when the program reopens, according to Chief Executive Everett Sands, including many applications from borrowers who were shut out of the first round.

"There was definitely a group of people who either got rejected from their bank, who didn't understand the process, who needed more technical assistance or business advising," Mr. Sands said. These borrowers stand a better chance of funding now, he said, but even so, "I think we'll come out of it saying it was not enough," he added.

The PPP program is aimed at helping small businesses weather fallout from the coronavirus crisis, and the loans and interest are designed to be forgiven if employers retain or rehire most of their workers. The Small Business Administration oversees the program but loans are made by banks and other lenders.

Combined, the two tranches of money totaling $670 billion (including administrative costs) are designed to provide paychecks for the roughly 60 million workers in the small-business sector for about two months, a Treasury Department spokesman said.

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Small businesses are generally defined as companies with 500 or fewer employees, but special exemptions were made for certain sectors, including restaurants and hotel chains, triggering controversy.

Bankers say they see no letup in demand. JPMorgan Chase & Co. has a queue of about 40,000 processed applications from small businesses for a total of $7.3 billion in loans that it is ready to submit to the SBA. The bank has a pipeline of more than 200,000 applications for tens of billions of dollars of payroll loans that it is also working through.

Banks have also gotten faster at processing PPP applications, suggesting that the money could be claimed more quickly. JPMorgan was able to process nearly twice as many applications in the final three days of the program as in the preceding nine days.

Some lenders continued to accept applications during the funding lapse, further building the pipeline of demand. Mariner Kemper, chief executive of Kansas City, Mo.-based UMB Financial Corp., said the bank had received about 400 applications since the program closed, bringing its total backlog to 1,000 applications.

"I think it's going to be a challenge, because once they open the floodgates again, the banks will be more ready and queued up to hit send, " Mr. Kemper said. UMB said it plans to start by submitting applications processed before the lapse, once the program reopens.

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The Office of Management and Budget, on behalf of the Trump administration, on April 7 officially requested that Congress authorize an additional $251 billion for the Paycheck Protection Program, citing strong demand and a belief the program would run dry.

Democrats and Republicans then argued for roughly two weeks over the terms of the additional funding, with the Senate ultimately agreeing Tuesday to an aid package that included more money for the program, among other measures.

Of the additional PPP appropriation, $60 billion will be set aside for small, midsize and community lenders. Democrats had pushed for an earmarked amount for smaller lenders to address worries that certain groups -- including minorities and people in rural areas -- would have trouble accessing the program. Those concerns were driven in part by some banks that prioritized applications from their existing customers in an effort to manage overwhelming demand.

Senate Majority Leader Mitch McConnell (R., Ky.) indicated Tuesday that Republicans might not be as willing to replenish the fund as copiously in the future. After allocating hundreds of billions of dollars, Mr. McConnell said he would be balancing the implications of the ballooning debt against requests for more money in subsequent legislation.

"We need to push the pause button here and begin to listen to people who know something about debt and deficits and give us some advice about just how much the country can take on without doing serious damage to the future," Mr. McConnell said. "We've given very little thought about that."

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Treasury Secretary Steven Mnuchin at a White House briefing Tuesday said he expected the replenishment to be the last tranche of money for the program.

"But obviously, we can always reconsider that," Mr. Mnuchin said.

Democrats have already suggested they would be open to providing more aid for small businesses, along with other groups, in the next relief package. Senate Minority Leader Chuck Schumer (D., N.Y.) said he hoped future legislation would include money for state and local governments, hospitals, "probably small businesses" and others.

Meanwhile, there is concern among some lawmakers that large companies are snapping up PPP loans intended for much smaller businesses.

"You big companies out there: Give the money back, support your workers, " Sen. Martha McSally (R., Ariz.) said Wednesday on Fox. "You big banks out there: You get that money out to those mom-and-pop shops, those one-person businesses."

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Ade Odutola, chief executive of information technology consulting firm Solvitur Systems in Leesburg, Va., said he was hopeful that pushback from the public would mean fewer large firms apply for the program when it restarts.

Mr. Odutola said his application didn't receive approval before the funding dried up, but that his bank has assured him it is in the queue for submission once the money is replenished.

"Because I am a business owner, I always plan on the worst-case scenario, " Mr. Odutola said. "My planning is that it won't come through, but I'm hopeful that it will."

Kristina Peterson and Peter Rudegeair contributed to this article.