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Paycheck Protection Program runs out of money

April 16, 2020

The Paycheck Protection Program has run out of money, shutting out thousands of companies that were seeking aid during the coronavirus pandemic.

On Thursday morning, the SBA sent out a notice stating that is now “unable to accept new applications for the Paycheck Protection Program based on available appropriations funding.”

The SBA and Treasury Department have yet to release any formal statistics on total loan disbursements from banks to small business owners. The SBA did release data on Tuesday showing a breakdown of approved loans by state and by industry through April 13. The data showed an overall average loan size of just under $240,000.

As of Monday, April 13, more than 22,000 Iowa companies had been approved for loans for nearly $3.75 billion. The average approved loan for Iowa companies is approximately $168,000.

While the program quickly hits its $349 billion limit, Congress has yet to agree on new funding. The White House and Congressional leaders are continuing to negotiate the details of adding an additional $250 billion to the fund.

The PPP loans are intended to help small businesses retain staff during the severe economic disruption caused by the pandemic. Businesses that maintain their payroll are eligible for forgiveness of 100% of the loan, with the stipulation that 75% of the loan must be spent on payroll.

Previous coverage

Treasury Department releases new guidance rules on SBA Loans –April 3, 2020

Senate Stimulus: What it would mean for the tech sector -March 27, 2020

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Tags: coronavirus COVID-19 payment protections program SBA

Paycheck Protection Program runs out of money | Clay & Milk

A central Iowa ag-tech accelerator has secured more backers and finally has a name. The Greater Des Moines Partnership first announced the accelerator last year, naming four initial investors. On Monday, the Partnership said the program will be called the "Iowa AgriTech Accelerator" and named three new investors. The new investors include Grinnell Mutual, Kent Corp. and Sukup Manufacturing, all Iowa companies. They join investors Deere & Co., Peoples Co., Farmers Mutual Hail Insurance Co. and DuPont Pioneer. Each investor has agreed to put up $100,000 for the first year of the accelerator. Startups entering the program will receive $40,000 in seed funding in exchange for 6 percent equity. Tej Dhawan, an angel investor and local startup mentor, is serving as interim director until the AgriTech Accelerator names a permanent leader. Dhawan held a similar role with the GIA before Brian Hemesath was named as managing director. As interim director, Dhawan said his main job includes hiring the accelerator's executive director, establishing a business structure and initial recruiting for the first cohort. The accelerator will place few filters, such as location and product, on the applicant pool, Dhawan said. "When you’re seeking innovation, innovation can come from every corner of the world so why restrict ourselves," he said. One area the the AgriTech Accelerator won't recruit from is biotech. For its first cohort, the AgriTech Accelerator will work out of the GIA's space in Des Moines' East Village, Dhawan said. A future, permanent home is still to be decided. The accelerator's program will host startups from mid-July through mid-October, ending with an event connected to the annual World Food Prize. The GIA, which the AgriTech Accelerator is based on, also ends with presentations at an industry event. The accelerator has also started lining up a mentor pool. The Iowa Corn Growers Association, Iowa Soybean Association and the Iowa Pork Producers Association have agreed to provide mentors, as has Iowa State University. While the AgriTech Accelerator is loosely based off of the GIA, it will differ in its business structure, Dhawan said. The GIA runs through a for-profit model for both operations and its investment fund. The AgriTech Accelerator will have a nonprofit model for its operations and a for-profit setup for its fund. Dhawan said the nonprofit model is being used so the accelerator can better work with other nonprofit partners, such as trade associations. "These are all organizations that are nonprofits and can be amazing stakeholders without ever having to be investors in the accelerator," he said. "It becomes easier to work with trade associations in their nonprofit role when we are also a nonprofit." When it's up and running, the AgriTech Accelerator would be one of a handful of ag-focused startup development programs in Iowa. Others include the Ag Startup Engine out of Iowa State University and the Rural Ventures Alliance from Iowa MicroLoan. Matthew Patane is the managing editor and co-founder of Clay & Milk. Send him an email at mpatane@clayandmilk.com.

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