Paycheck program ends with $130 billion unspent

After a stumbling start three months ago, the government’s centerpiece relief program for small businesses is ending with money left over.

The Paycheck Protection Program was set to wrap up Tuesday after handing out $520 billion in loans meant to preserve workers’ jobs during the coronavirus pandemic. But as new outbreaks spike across the country and force many states to rethink their plans to reopen businesses, the program is closing down with more than $130 billion still in its coffers.

“The fact that it was able to reach so far into the small-business sector is a major achievement, and those things are worth acknowledging and celebrating,” said John Lettieri, chief executive of the Economic Innovation Group, a think tank focused on entrepreneurship. “But we’re still in a public health crisis, and we’re facing a long, slow, uneven return. Millions of businesses still have their survival at risk.”

The hastily constructed and frequently chaotic aid program, run by the Small Business Administration but carried out through banks, handed out money to nearly 5 million businesses nationwide, giving them low-interest loans to cover 21⁄2 months of their typical payroll costs.

Those that use most of the money to pay employees can have their debt forgiven.

The cash went to a wide variety of companies: manufacturing firms with hundreds of workers, Main Street retailers with a few dozen employees, and freelancers working for themselves.

The loans ranged from a few hundred dollars to $10 million, and allowed businesses to keep paying employees — even if they had nothing to do but sit at home.

The program appears to have helped prevent the nation’s staggering job losses from growing even worse. Hiring rebounded more than expected in May as companies in some of the hardest-hit industries restored millions of jobs.

But the program was also marred by technical problems and confusing, frequently revised rules that frustrated borrowers and lenders alike. Some banks limited their lending to companies with which they already had relationships.

The money left over after the final applications are received late Tuesday will stay with the Treasury.

Treasury Secretary Steven Mnuchin said during a House Financial Services Committee hearing Tuesday that he has had discussions with senators from both parties about allowing the remaining funds to be repurposed. The change, which would require congressional action, would be designed so that hard-hit industries such as restaurants and travel would have access to the money.

Lenders cited two main reasons there was money left over. First, most eligible companies that wanted a loan were ultimately able to obtain one. The program limited each applicant to only one loan.

Also, the program’s complicated requirements dissuaded some qualified borrowers, who feared they would be unable to get their loan forgiven. Trying to comply with those rules was a challenge for many businesses.

KRISTIAN THACKER/THE NEW YORK TIMES Employees work Monday at West Virginia Eye Consultants in Beckley, West Virginia. The business furloughed 40 employees, but nearly all are back on the job.