Labor Day

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The Paycheck Protection Program, which has kept millions of small businesses afloat during the pandemic, is in limbo, creating a new source of uncertainty for the country’s economic recovery.

The collapse of pandemic relief negotiations has brought complications for the massive emergency lending program, which shut down on Saturday to new loans after doling out more than $520 billion in funds, leaving banks and borrowers unsure of how to proceed with a key phase of the rescue.

Before talks between congressional Democrats and the White House fell apart, there was clear bipartisan support emerging for revamping the program, which offers government-backed small business loans that can be forgiven if employers maintain their payroll. One major revision would make it easier to convert the smallest loans — those for $150,000 or less, which account for most of the program's volume — into outright grants, making life easier for both borrowers and lenders.

But the negotiations stalled just as the Small Business Administration this week began accepting applications for businesses to have the loans forgiven. Now many lenders are waiting to see whether a deal can be salvaged before they start the process. The stalemate is creating more doubts for small business owners as they try to navigate the program and avoid being stuck paying back loans they expected to be forgiven.