By Carmen Reinicke - CNBC + Acorns
America's small businesses are realizing that they may soon no longer be able to benefit from the Payroll Protection Program (PPP).
This is because money from this federal COVID-19 pandemic assistance program is running out.
A majority of lawmakers overwhelmingly supported the extension of the PPP last month, moving its deadline from March 31 to May 31.
The program, which was established under the CARES Act last year to provide small business loans (forgivable if spent primarily on payroll), reopened in January for a
second round of aid with more than $ 284 billion in funding.
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The American Rescue Plan (ARP) approved in March allocated an additional $ 7.25 billion to the PPP, bringing the total to nearly $ 292 million.
As of April 5, the Small Business Administration, which oversees the program, approved nearly 4 million PPP loans worth about $ 224 billion, according to the agency.
That means there are around $ 68 billion left to spend.
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The possibility of the money running out hadn't been the most important thing, at least in this round of the program, until just before the extension was fulfilled.
At a March 24 Senate hearing, Patrick Kelley, associate administrator for the Office of Access to Capital at the Federal Small Business Development Agency (SBA), noted that the PPP had left about 79 billion, which would be exhausted in mid-April if applications continued at the same rate.
Additionally, at the time, the SBA had
about 190,000 loans on hold
, while pending issues with applications were resolved, further reducing remaining funds.
"This program will not really be active until May 30, as the money will run out," said Erik Asgeirsson, president and CEO of CPA.com, the business and technology division of the American Institute of Certified Public Accountants.
"I don't think anyone knew the money would run out until the SBA made that announcement."
An aid program riddled with problems
Although it has helped millions of companies keep employees on payroll, the program has been plagued with problems from the beginning, thanks to its rapid implementation.
The first round of aid sold out quickly and the money went mainly to larger and stronger companies, leaving out the most vulnerable.
When the second round began in January, smaller businesses were better able to access funds, but processing times took longer as the SBA implemented new rules to combat fraud.
And changes of another nature led to further confusion.
In February, the Biden Administration announced that it would update the eligibility criteria for the program, a new loan calculation formula for sole proprietorships, and a two-week advance application sale for businesses with fewer than 20 employees.
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The goal was to help smaller businesses, which are predominantly owned by women and people of color, access these forgivable loans.
However, the timing of the new rules gave companies little time to take advantage of them.
Also, sole proprietors who asked for help before the new loan calculation was announced were upset that the difference could be thousands of dollars in forgivable funds.
The expansion of the program gave these smaller businesses more time to apply for the loans.
Ending it too soon, or not allocating more funds, would mean bankruptcy for more vulnerable companies.
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"We're finally at a point where there is some equity for the most underserved businesses," said Rebecca Shi, executive director of the American Business Immigration Coalition, which is calling for more funding and retroactive sole proprietorship loans.
There are certainly signs that the economy is improving and recovering from the pandemic.
The country added 916,000 jobs in March and vaccination is accelerating.
In addition, there are other programs through the SBA that will help small businesses and they have expanded recently, such as the Economic Injury Disaster Loan.
Still, that's
not a reason to end the PPP and its forgivable loans
, according to Shi, but perhaps to consider more specific relief.
The pandemic and its economic impact are far from over, especially for smaller companies that are not benefiting from the so-called recovery in K, Shi said.
More money, more changes
Now lenders and borrowers are asking for more changes to the program.
These include more funding, allowing small businesses to get second loans, and making the new loan calculation formula retroactive for sole proprietors.
If lawmakers vote to complete the program, hopefully sooner rather than later, according to Sam Sidhu, chief operating officer for Clientes Bank in Wyomissing, Pennsylvania.
"When you feel like you're racing against the clock, you create that anxiety that existed in April of last year, the thought of 'I probably won't get that money,'" Sidhu said.
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By his estimate, between $ 100 billion and $ 150 billion would likely be enough funding for the PPP to reach May 31 with some money left over.
Meanwhile, companies that want to benefit from the program, especially those that have not received money from the PPP, should apply as soon as possible.
"Businesses don't know they have to hurry, but they better hurry," Asgeirsson said, adding that he is also concerned that lenders will start closing their platforms as money runs out.
"That will make people panic."
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Sarah Foster, 49, owns a jewelry and design store in Prescott, Arizona, and is one of the sole proprietors who would have benefited from the new loan formula.
Foster applied for a second loan from the PPP as soon as he could this year and
obtained about $ 5,250 in March.
If you had waited just a few more weeks to apply under the new formula (which hadn't been announced when you submitted your paperwork), you would have been eligible to receive around 14,000.
The difference in funding is especially important for small businesses like Foster's right now, as state economies are slowly opening up again, he said.
"$ 10,000 or $ 20,000 could make a small business float or sink, because we are in the process of vaccination," he said.
This article is part of the Invest in You Ready series. Set. Grow (Invest in you: Ready. Done. Grow), an initiative of CNBC and Acorns, the microinvestment app. NBC Universal and Comcast Ventures are Acorns investors.