CARES Act Paycheck Protection Program Runs Out of Money

Just two weeks after it began accepting applications, the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP) ran out of funds on Thursday, April 16.

“The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding,” a note on the SBA’s PPP page.

The application window opened on April 3 and after a week, $182 billion of the allocated $349 billion had been promised to small business applicants. Less than a week later, it was gone.

To qualify for these loans, businesses must employ fewer than 500 workers, unless the SBA’s industry size standard is higher. For breweries, the size standard is 1,250.

Loans were capped at 2.5 times the applicant’s average monthly payroll expenses, 75% of which was required to be spent on payroll.

The average loan size is $206,000 — or $20,600 per week in payroll, according to the SBA. About three quarters of the loans given out were under $150,000; these loans accounted for $58.3 billion.

Loans were capped at $10 million per company, and the largest group broken out — $5 million and up — accounted for 0.27% of loans and 9% of funds.

The construction industry received the most money, $44.9 billion total over 177,905 loans, which accounts for a little more than 13% of the total allocation. The retail trade received the most loans, 186,429 loans, for a total of $29.4 billion.

Industries were broken out by North American Industry Classification System (NAICS) codes, a system that categorizes companies in the U.S., Canada and Mexico.

The manufacturing industry, which has a segment for breweries, received $40.9 billion in 108,863 loans, about 12% of the total. However, 5,977 breweries fall into the Brewers Association’s taproom and brewpub categories, meaning they sell 75% of their volume on their own premises, and could be included in the NAICS accommodation and food service category, which includes a code for “drinking places (alcoholic beverages.)” That industry received $30.5 billion in 161,876 loans.

Among the craft breweries that have been approved for loans are Minneapolis, Minnesota-based Surly Brewing, Saint Louis, Missouri-based 2nd Shift Brewing and Watford City, North Dakota-based Stonehome Brew Pub.

The industry that received the most loans was the professional, scientific and technical services industry with 208,360 loans totaling $43.2 billion.

States that received the most money include:

  • California — $33.4 billion in 112,967 loans;
  • Texas — $28.4 billion in 134,737 loans;
  • New York — $20.3 billion in 81,075 loans;
  • Florida — $17.8 billion in 88,997 loans;
  • Illinois — $15.9 billion in 69,893 loans.

“Some of these numbers are interesting,” Stonehearth Capital Management senior financial planner Andrew Nadeau said. “I wouldn’t expect Florida to have $7 billion more in loans than Massachusetts, but I guess that shows how hard the travel and leisure sector has been hit.”

Financial analysis firm Evercore ISI compared the loans by state to the amount of money businesses were eligible for based on payroll and found that California and New York ranked at the bottom. California and New York businesses received 24% and 23% of the money they were eligible for, respectively.

Nevertheless, many small businesses were left on the outside looking in. The Bruery and its sister brand Offshoot Beer Co., based in Orange County, California, were excluded from this round of PPP funds, CEO Barry Holmes told Brewbound.

“With that, then it gives us a lot more runway,” he said. “Without it, it becomes much, much tougher. But, for now, we’re mitigating some of those losses with our strengths.”

Holmes said The Bruery will have to wait for the next relief package to make its way through Congress.

The wait will last until at least next week. Senate Democrats and Republicans have failed to reach a deal on adding more money to the fund, and the Senate has been adjourned until next week.