For small business lending program, a few hits, some misses

NEW YORK (AP) — The Trump administration has dispensed about $530 billion to millions of small businesses to cushion them from the sharp downturn induced by the coronavirus.

The question is: how effective will the Paycheck Protection Program be?

Some small business owners say the program’s low-cost loans have enabled them to forestall layoffs or rehire staff – and they appreciate that the loans are forgiven if they spend the bulk of the money saving jobs.

However, even with these incentives, the program is running up against a brutal reality: unemployment is rising to Depression-era levels and a deep recession has settled upon Main Streets across the country even as states begin to restart their economies.

The program has faced criticism for some missteps: applications were held up early on as government computers were overwhelmed; large businesses and publicly traded companies received loans while many mom-and-pops were shut out of the first round of funding and it’s still not entirely clear what conditions business must meet to have their loans forgiven.

A challenge for many small businesses is deciding how to use the money. To have the loan forgiven, at least three-quarters of the money must go toward paying workers. But with the economy frozen and their customers at home, some owners are reluctant to recall staff that they don’t need.

Below is a more detailed look at the program’s successes, failures and unknowns.

WHAT ARE THE BENEFITS FOR COMPANIES?

The Small Business Administration has so far approved loans to nearly 4 million businesses. Now in its second round of funding, an increasing number of loans are going to the smallest companies. The average loan size in the $349 billion first round of funding was $206,000; as of Wednesday the average loan...