WASHINGTON (NYTIMES) - A new federal programme to help small businesses weather the coronavirus pandemic is running out of money and falling short in the industries and states most battered by the crisis, risking waves of bankruptcies and millions of additional unemployed workers.

Funding for the Paycheck Protection Programme, an initiative created by the US$2.2 trillion (S$3.13 trillion) stimulus law enacted last month, may have been exhausted as early as Wednesday night (April 15), meaning that the Small Business Administration would have to stop approving applications.

As of early on Wednesday afternoon, more than 1.3 million loans had been approved at a value of close to US$300 billion, according to a person with knowledge of the numbers.

But congressional leaders and the Trump administration have failed to reach agreement on adding hundreds of billions of dollars to replenish the programme, hamstrung by a dispute over whether to carry out sweeping changes to how it allocates loans to businesses across the country.

The desperate situation reflects the fitful nature of the government's efforts to put into effect the hulking stimulus plan, a measure that was hastily negotiated by Congress and the administration as both faced intense pressure to respond to an extraordinary public health and economic catastrophe.

Economists warned at the time that the package allocated too little for small businesses and ran the risk of steering too much of that money away from companies that needed it the most.

The small-business loan programme - which enjoys broad bipartisan support - was among the first to be unveiled, and its introduction has been plagued with problems even as businesses have inundated banks with requests for a piece of the aid.

Administration officials and congressional Republicans have pushed for a quick infusion of cash to keep the programme going. But while they support the additional spending, Democrats have insisted on attaching new restrictions to ensure the money flows to minority-owned businesses and other companies that are traditionally disadvantaged in the lending market.

They also want to add more money for hospitals, food-stamp recipients and state and local governments whose tax receipts have plunged.

Republicans have refused to do either, saying that policy debates and additional funding should be considered later in light of the programme's dire state.

"Now 700,000 small-business applications are in limbo & no new loans will be made until the game of chicken in Congress ends & additional $ approved," Senator Marco Rubio, a Florida Republican, said on Twitter. "Inexcusable."

But Speaker Nancy Pelosi of California warned again on Wednesday that the Republican proposal would not pass the House, saying in a statement that it failed to address "critical issues".

Senator Chuck Schumer of New York, the minority leader, spoke on Wednesday with Mr Steven Mnuchin, the Treasury Secretary, in an effort to restart talks, and their aides were to confer later in the day.

But it was unclear if any agreement struck between Democrats and the administration would be palatable to Senate Republicans, particularly with lawmakers scheduled to remain in their respective districts and states until early May.

Without the full chamber present, any one lawmaker could block an attempt to approve the legislation - which Democrats did a week ago when Senator Mitch McConnell, the majority leader, tried to push through the administration's US$250 billion request for the programme.

"We see no reason why we can't come to an agreement," Mr Schumer said on Wednesday, warning that millions of jobs could be lost if additional funding was not allocated for hospitals and state and local governments.

"We Democrats believe that we need more money for small business, but we need it to go to the people who are underbanked and underserved."

The stimulus law included US$349 billion for the Paycheck Protection Programme, which underwrites bank loans for small businesses that will never need to be repaid if owners use most of the money to keep paying employees for two-and-a-half months.

Economists and business lobbyists warned when the bill was being debated that the money was nowhere close to the US$1 trillion or more that companies would need.

"We always knew we would have to come back and replenish it - we thought we were going to have an outreach problem, letting people know that this programme existed," said Mr Rubio, the chairman of the Senate Committee on Small Business and Entrepreneurship.

"It's an ironic situation, because everyone's in favour of it," he said of the programme. "I just want to see action."

Democrats say that while they support supplying the programme with additional aid, there remain challenges in ensuring that all businesses are not only receiving the loans, but the actual funds themselves.

"It's a critically important thing to accomplish - you want to be able to allow the small businesses to jump start on the other side of this," said Representative Antonio Delgado of New York, whose upstate district is one of the most rural counties represented by a Democrat.

He added, "The challenge has been having people access these funds."

Early evidence suggests that the efforts have disproportionately helped manufacturers and construction firms at the expense of the hospitality businesses - including restaurants, bars and hotels - that have suffered the highest rates of job loss in a month that seen nearly 17 million Americans file for unemployment.

The loans are allocated on a first-come, first-served basis, an approach that has favoured businesses that have existing relationships with lenders and the resources to navigate the government application process.

Data released on Tuesday by the Small Business Administration, which is administering the loan programme, shows that construction companies have garnered nearly US$34 billion, which is about 14 per cent of the US$250 billion that had been allocated through Monday. Manufacturers secured more than 12 per cent of the loans, about US$30 billion.

"Accommodation and food services" borrowers ranked fifth, with just under US$23 billion in loans, or less than 10 per cent of the total.

That distribution does not match the spread of damage from the crisis. Weekly data on unemployment claims released by some states suggest that food and other hospitality businesses have been devastated by a crisis that has closed dine-in establishments across the country.

In Washington state, accommodation and food service workers have accounted for nearly 20 per cent of industry-categorised unemployment claims filed over the last three weeks.

In Minnesota, cooks, wait staff and other food service workers have filed nearly a quarter of the state's unemployment claims in that time.

Thus far, the geographic flow of the funds is also not lining up with the economic damage from the virus.

New York companies have secured less than half as many loans as Texas companies, for example, even though the share of New York's labour force that has filed for unemployment is twice as high as that of Texas.

Adjusted for the total amount of small-business payroll spending in their states, many less populous states are faring well, including Kansas and Nebraska - possibly because of the strength of relationships between community bankers and businesses in those states.

Bankers and borrowers alike want changes made to the programme.

Restaurants and hotels have pushed for changes in how the money is allocated and in the rules for how it must be spent, including the mandatory amounts for maintaining payrolls, saying they need the flexibility to cover other costs like rent for as long as the crisis keeps them closed or their revenues low.

Mr Robert Sawyer, owner of the Barn Bistro, a restaurant on Martha's Vineyard in Massachusetts, said he was expecting to have to operate with a reduced level of service for months even after an initial relaxation of the restrictions local officials put in place to stop the spread of the virus.

Mr Sawyer said it did not make sense to him to keep paying his employees when the very existence of his business was uncertain.

"The notion that we should send this payroll to our laid-off employees does not in any way help a small business," he said.

Bankers have pushed to temporarily relax anti-money-laundering rules that force them to closely scrutinise borrowers, and they say the SBA's computer system needs to be upgraded.

Some of the banks trying to participate in the programme still cannot link up properly with the agency to submit applications.

The country's smallest banks want the next round of stimulus to have a portion earmarked specifically for them - US$50 billion out of US$250 billion in additional stimulus money.

"Because the largest banks do not serve America's smaller, rural communities, it would be a costly policy mistake to allow these lenders to soak up a disproportionate share of the funding," Ms Rebecca Romero Rainey, chief executive of the Independent Community Bankers of America, a trade group representing the smallest banks, wrote in a letter to congressional leaders on Monday.

Whatever changes Congress makes, though, banks want lawmakers to get the next stimulus package done quickly.

"Time is of the essence," Mr Rob Nichols, the president of the American Bankers Association, a bank trade group that represents both large and small banks, said in a call with journalists on Tuesday.

Many larger companies have found aid easier to come by, thanks to the Federal Reserve.

The Fed has rolled out a series of emergency lending programmes that helped calm markets, including the all-important government bond market, one for short-term business debt and an ecosystem of cash-based mutual funds that are supposed to be safe havens for conservative investors.

Thanks to those programmes, bankers reported this week that market conditions were returning to something nearer to normal.

The heightened trading volume from mid-March that signalled panic among financial market participants has fallen.

Blue-chip companies rushed to issue more debt so they could raise cash to shore up their balance sheets, and sales of that debt were successful, bankers said.

"The amount of high-grade investment deals done in the month of March was a record," said Bank of America's chief executive, Mr Brian Moynihan, on a call with journalists on Wednesday.

More recently, Mr Moynihan added, even companies experiencing some instability, including those whose finances have been directly impacted by the crisis, have been able to borrow again.