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Minutes after a $310 billion aid program for small companies opened for business yesterday, the online portal for submitting applications crashed. And it kept crashing all day, much to the frustration of bankers around the country who were trying — and failing — to apply on behalf of desperate clients, the New York Times reported. Some bankers were so irritated that they vented on social media at the Small Business Administration, which is running the program. Rob Nichols, the chief executive of the American Bankers Association, wrote on Twitter that the trade group’s members were “deeply frustrated” at their inability to access the system. Until the problems were fixed, he said, “#AmericasBanks will not be able to help more struggling small businesses.” Pent-up demand for the funds has been intense, after the program’s initial $342 billion funding ran out in under two weeks, stranding hundreds of thousands of applicants whose loans did not get processed. Last week, Congress approved the additional $310 billion for small businesses hit by the coronavirus pandemic. Bankers were expecting the money to once again run out quickly, and so on Monday at 10:30 a.m., when round two opened, they were ready to go. But for the second time in a month, the relief effort, called the Paycheck Protection Program, turned into chaos, sowing confusion among lenders and borrowers. A centerpiece of the government’s $2 trillion economic stimulus package, the program offers small companies — typically those with up to 500 workers — forgivable loans of up to $10 million. The SBA is backing the loans, but customers must apply through financial institutions.

As Paycheck Protection Program (PPP) "Part II" loans are anticipated to be exhausted in 72 hours by small businesses struggling during the financial distress of the COVID-19 pandemic, will there be a "Part III, IV and V" on the horizon for the program? Read Stinson LLP's Tom Salerno providing his latest perspectives on funding for small businesses during the COVID-19 crisis and government responses.

The U.S. House of Representatives overwhelmingly approved a $484 billion coronavirus relief bill yesterday, funding small businesses and hospitals and pushing the total spending response to the crisis to an unprecedented near $3 trillion, Reuters reported. The measure passed the Democratic-led House by a vote of 388-5, with one member voting present. House members were meeting for the first time in weeks because of the coronavirus pandemic. Lawmakers, many wearing masks, approved the bill during an extended period of voting intended to allow them to remain at a distance from one another in line with public health recommendations. The House action sent the latest of four relief bills to the White House. Republican President Donald Trump, who backs the measure, said he would probably sign it into law on Thursday evening. The $484 billion aid bill was the fourth passed to address the coronavirus crisis. It replenishes funds to small businesses and provides hospitals struggling with the economic toll of a pandemic that has killed almost 50,000 people in the United States and thrown 26 million out of work, wiping out all the jobs created during the longest employment boom in U.S. history. Read more. 

In related news, a Reuters analysis of Small Business Administration data shows Utah, along with heartland manufacturing powers and key political battlegrounds like Ohio, Pennsylvania and Wisconsin, punched above their weight in the race to get loans from the $349 billion “Payroll Protection Program” that ran out of money in under two weeks. A comparison of local industry mix and payroll against national averages signals that important sectors in a handful of places — manufacturing in the heartland of the country, construction and oil and gas in the West — mobilized quickly and helped their states receive billions of dollars more than otherwise expected. Utah, for example, received about $600 million in SBA loans beyond what would have occurred if its firms had borrowed at national averages. In Indiana, with a heavy manufacturing presence, small businesses overall received about $1.2 billion more than if their industries had borrowed the same share of payroll as national firms. Read more. 

Hundreds of members of the U.S. House of Representatives will gather in Washington today to pass a $484 billion coronavirus relief bill, bringing the unprecedented total of funds approved for the crisis to nearly $3 trillion, Reuters reported. The measure is expected to be approved with solid bipartisan support in the Democratic-led House, but opposition by some members of both parties forced legislators to return to Washington despite stay-at-home orders intended to control the spread of the virus. The Republican-led Senate passed the legislation on Tuesday, so approval by the House will send it to the White House, where President Donald Trump has promised to quickly sign it into law. The bill — which would be the fourth passed to address the crisis — provides funds to small businesses and hospitals struggling with the economic toll of a pandemic that has killed more than 45,000 Americans and put more than 22 million out of work. Read more.

While the House is expected to approve an additional $320 billion for the Paycheck Protection Program today, there are concerns by lenders and small-business advocates that the funding still won’t be enough to meet demand for the coronavirus aid, the Wall Street Journal reported. Banks, credit unions and community-based lenders say that 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 said yesterday. Read more. (Subscription required.) 

The Senate passed a $484 billion deal yesterday to replenish a small-business loan program that’s been overrun by demand and to devote more money to hospitals and coronavirus testing, the Washington Post reported. President Trump said he would sign it into law. The legislation, which came together over days of intense negotiation that followed a bitter partisan standoff, would increase funding for the Paycheck Protection Program by $310 billion. It would also boost a separate small-business emergency grant and loan program by $60 billion, and direct $75 billion to hospitals and $25 billion to a new coronavirus testing program. The House is expected to approve the measure on Thursday. The Paycheck Protection Program was designed to help firms with fewer than 500 workers, but a number of larger companies found ways to obtain the funds in the past two weeks, leading to bipartisan outrage. Treasury Secretary Steven Mnuchin said yesterday that larger firms would now be blocked from using the program, and Trump called on some big companies that had already obtained taxpayer-backed loans to return the money.

The Trump administration and congressional leaders closed yesterday on an approximately $470 billion deal to renew funding for a small-business loan program that ran out of money under crushing demand during the coronavirus pandemic, aiming to pass the agreement into law within days, the Washington Post reported. The deal would also boost spending for hospitals and coronavirus testing by about $100 billion. President Trump expressed optimism yesterday evening about reaching an agreement by today. The deal would add about $310 billion to the Paycheck Protection Program for small businesses, which was swamped by demand in the three weeks since Congress created it as part of a $2 trillion coronavirus rescue bill. It also would add $60 billion to a separate emergency loan program for small businesses that is out of money, too, Senate Minority Leader Charles E. Schumer (D-N.Y.) said on CNN. The agreement would include $75 billion for hospitals and $25 billion for testing, which have been major Democratic demands. Some $60 billion in the new funding for the Paycheck Protection Program would be targeted specifically for smaller financial institutions to ensure loans for minority and lower-served areas, said people familiar with the plan who spoke on the condition of anonymity to describe it.

The streamlined and cost-effective processes within the Small Business Reorganization Act will be a key part of helping struggling small businesses reorganize amidst the COVID-19 economic crisis, according to a Bloomberg Businessweek analysis. Taking effect just two months ago, the new provisions had applied only to businesses or proprietors with less than $2.7 million in debt. But then, in late March, Congress temporarily upped this debt cap to $7.5 million as part of the $2 trillion CARES Act package. "The goal of the Subchapter V is to let the small business owner remain in possession of the assets," says Deborah Williamson, who heads the bankruptcy practice at the law firm Dykema. A small-business debtor must choose, or "elect," a Subchapter V proceeding. Otherwise the case will fall under the normal rules — and, says Williamson, there's no reason to do that unless you're determined to sell the company "and avoid working for the creditors." That's especially true now, because the $7.5 million debt ceiling in the coronavirus relief law applies only to Subchapter V cases. However, she says, companies that are already reorganizing through chapter 11 and that qualify for Subchapter V treatment can switch to it. The higher cap is much closer to the $10 million debt limit recommended by ABI's Commission to Study the Reform Chapter 11 originally sought. As the law currently stands, the limit will fall back to the parsimonious $2.7 million cap after one year, on March 27, 2021.

The U.S. Small Business Administration said yesterday that a $350 billion emergency U.S. loan program to help small businesses keep workers on their payrolls amid the novel coronavirus disruption has run out of funds, Reuters reported. That has left thousands of small businesses across the country, which have been forced to shut down in order to stem the outbreak, without badly needed funds to keep them afloat. “The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding,” the SBA said on its website, adding that as a result it could not enroll new lenders in the program for the time being. The SBA said in an email that nearly 5,000 banks had made roughly 1.6 million loans under the scheme, which was part of a $2.3 trillion congressional stimulus package passed last month to combat the economic damage caused by the virus. Major lenders, including Wells Fargo, JPMorgan and Bank of America, have been inundated with hundreds of thousands of loan applications, far more than they have been able to process, according to the banks and Washington, D.C., trade groups. The Trump administration has been pressing Congress to approve an extra $250 billion for the program, which provides small businesses with guaranteed bank loans that can be forgiven provided most of the money is used for payroll costs. But lawmakers have yet to agree on legislation, as Democrats push to include other provisions to ensure financing for minority-owned and rural businesses and assistance for hospitals, state and local governments and the poor. Republicans oppose the additional measures.

A small-business loan program designed to back workers’ paychecks has exhausted most of its funding, ramping up pressure on congressional Democrats and Republicans aligned with the White House to reach a deal on the next round of economic aid amid the coronavirus crisis, the Wall Street Journal reported. Negotiations between Congress and the White House over replenishing the small-business program resumed Wednesday. The Paycheck Protection Program was on track to exhaust most of its initial allocation of $350 billion by today, with the Small Business Administration saying that it had approved more than 1.5 million loans valued at more than $324 billion as of yesterday and loans were continuing to be processed. The fund needs about $10 billion to cover processing and fees, Senate Small Business Committee Chairman Marco Rubio (R-Fla.) said on Twitter. Both Democrats and Republicans want to add $250 billion to the small-business aid program, but have been sparring for days over whether to add restrictions to the funds. Democrats want to expand access to the loans as well as include more money for hospitals, food assistance and state and local governments. Republicans, meanwhile, said that they want to keep the bill focused on increasing small-business aid and defer other funding debates until the next, broader legislation is crafted. Read more. (Subscription required.)

In related news, franchise companies that collectively provide jobs for hundreds of thousands of workers across the country are locked out of stimulus funding linked to the coronavirus pandemic because of how the Small Business Administration is interpreting the congressional relief package’s rules, the Wall Street Journal reported. The affected businesses include commercial cleaners, home-repair companies, salons and other franchise operations that the SBA says aren’t eligible for Payroll Protection Program loans in Congress’s Cares Act because of the way the franchises are structured or operate. he SBA, which oversees the roughly $350 billion Paycheck Protection Program, has told franchises that to tap the emergency aid they must be listed on a directory it uses to determine loan eligibility in normal times, business owners say. Most of the affected businesses are structured as tiered franchises, which differs from the national franchise system common in the fast-food industry. Under the tiered model, the franchiser typically sells regional rights to franchisees, which then sell local units. Read more. (Subscription required.)