Congress' game of chicken on PPP could kill many small businesses

New applications are suspended for the Paycheck Protection Program for small businesses after its fund ran out Thursday, unless and until congressional Democrats and Republicans settle their differences and pass a $250 billion expansion.

Why it matters: For many small businesses, this moratorium on a key coronavirus stimulus package could prove lethal.

President Trump has repeatedly boasted that PPP has been wildly successful. And he's right, despite the many glitches that he's loathe to acknowledge.

• The CARES Act wasn't even law at this time three weeks ago. Standing up and executing such a massive program, which involved over 1.5 million small businesses and around 5,000 lenders, in such a short amount of time is an extraordinary accomplishment.

It's also true that there have been inequities.

• Some small businesses were at a disadvantage if they picked "the wrong" bank, or didn't have the right relationship with that bank.
• Small businesses with in-house finance or accounting professionals likely had a leg up. Same goes for ones with savvy institutional investors, depending on what their lawyers told them about affiliation rules, and that will engender understandable bitterness from bootstrapped mom-and-pops.
• If there's still $250 billion of demand, that means there are well over 1 million small businesses in need (based on the initial pot's average loan size).

Congress is playing chicken with people's livelihoods.

• Congressional Democrats have a strong case that more funding is needed for hospitals and state/local governments, and that congressional Republicans are being improperly intransigent on tying those monies to PPP+.
• But now they're letting the perfect be the enemy of the good, and it's bound to cause widespread pain.

The bottom line: If that $250 billion doesn't materialize by Monday, then PPP may be remembered as much for those it left behind as for those it helped.