Why PPP is coming up short

A report from the Census Bureau finds that three out of four U.S. small businesses have sought financial assistance through the Small Business Administration’s Paycheck Protection Program, but data show that just a fraction of those have received funding.

The state of play: While the first iteration of the PPP exhausted its $349 billion of capital in two weeks, the second round of the program still has nearly 40% of its funding left, almost three weeks after being launched.

What it means: There are more than 30 million small businesses in the country but just under 6 million have gotten the loans. That means it's likely many in need of funding haven't been able to get it or have chosen not to pursue it.

Why it matters: The PPP was designed to keep employers tied to their workers ensuring that more Americans could easily get their jobs back once the coronavirus outbreak was tamed and the economy could restart.

What happened: "Backlash against publicly traded firms that dipped into the funds, and heightened federal scrutiny have likely chased away some firms," TD Securities macro strategist Oscar Muñoz writes in a note to clients.

• "Limits imposed on the use of the funds to cover operational expenses other than payrolls have also diminished interest."
• "Note that loans are fully forgiven if at least 75% is used to cover payroll costs."

Between the lines: Small business owners and various trade organizations also complained that the PPP's 60-day time constraint, delayed rollout, and the way it countered newly increased unemployment benefits meant many business owners simply didn't want it and others were unable to apply.

The last word: The real success or failure of PPP won't be known until we reach the eight-week mark from when the loans were given out, Torsten Slok, chief economist at Deutsche Bank Securities, tells Axios.

• "For the program to be a success ultimately you need to see one thing and only one thing: You need to see job growth go up in the millions in May and in June because that’s when we get closer to the deadline for companies to hire back their workers."

Go deeper: Volume of loan applications doubles in second round of PPP