Small-business loan fund runs out as aid talks drag on
No deal yet on new cash infusion for key lending program; GOP senator says Trump open to a deal with Democrats
The Small Business Administration on Thursday reached its limit for issuing new forgivable small-business loans as Democratic leaders and the Trump administration resumed talks over the next COVID-19 relief package.
After opening a brief pro forma session Thursday afternoon, Senate Majority Leader Mitch McConnell, R-Ky., chided Democrats for not agreeing to whisk through the chamber hundreds of billions of dollars more for the so-called Paycheck Protection Program.
He said “absolutely no progress” had been made on a bipartisan agreement since last week, when McConnell last tried to gain consent to add another $251 billion to the program, which burned through its initial allocation in about two weeks.
But there some rays of hope for a bipartisan deal that could pass both chambers. Sen. Roy Blunt, R-Mo., who was also at the Capitol on Thursday, told reporters President Donald Trump said on an earlier call with senators that he’s open to additional items Democrats want in order to get a deal on small-business funds.
Democrats are seeking to add $150 billion more for states and localities and another $100 billion for hospitals, mirroring amounts appropriated in last month’s huge aid package that the Congressional Budget Office says will cost $1.8 trillion.
“I would think money for rural hospitals and other hospitals who didn’t benefit as much as they should have from that first distribution” could be part of a new aid bill, said Blunt, the top Republican on the Senate Labor-HHS-Education Appropriations Subcommittee.
“What is it that we really need to do right now, we know that’s Paycheck Protection. Apparently the president’s open to discussing another topic or two,” Blunt added. “I would be open to that discussion, but I’m open to that discussion being very narrowly focused on what we did in [last month’s bill] that’s already proven to be not quite hitting the mark we hoped to hit.”
Blunt’s comments echo those of Senate Small Business and Entrepreneurship Chairman Marco Rubio, R-Fla., who says there’s GOP support for additional funds for hospitals, as well as states and localities, as long as the money is distributed fairly across the country.
But Rubio, McConnell and Blunt all said it would be preferable to deal with the SBA funding crunch now and consider other programs later since they still have money available.
After backing out fees paid to lenders and other processing costs, the SBA ran out of cash to distribute PPP loans Thursday morning.
Businesses ‘in limbo’
The agency said $339 billion had been approved for nearly 1.7 million businesses. But Rubio said on Fox Business that about 700,000 additional applications “are in limbo, are stuck and cannot be processed because [Democrats] are playing political games with it.”
[Coronavirus Special Report with Sen. Marco Rubio]
Republicans are seeking to boost the amount of available loans to $600 billion, with an extra $10 billion to pay the lender fees so the full amount can go directly to small businesses.
But Democrats have made clear that they want more of the aid to go to rural and underserved communities where the smallest firms may not have established relationships with big banks that dominate the SBA lending program.
Democratic leaders have been in negotiations with Treasury Secretary Steven Mnuchin over the structure of that program as well as more money for a related disaster loan account that’s also tapped out. The agency had to ration the average $200,000 loan down to $15,000 last week and ran out of money altogether this week.
On Thursday, 103 House lawmakers — 55 Republicans and 48 Democrats — led by Bradley Byrne, R-Ala., and Jim Cooper, D-Tenn., urged more money for the loan program and associated cash grants appropriated in last month’s $2.3 trillion aid package.
The bipartisan group wrote that “we would strongly back an appropriations request by the Administration to allow the [economic injury disaster loan] program to meet the average demand of requests received.”
Speaker Nancy Pelosi, D-Calif., told reporters on a call Thursday that talks would pick up again later in the day. Democrats support more PPP money. But “we don’t want it to perpetuate the disparity of access for some,” Pelosi said, adding that the discussions around aid to states and hospitals “are two arenas in which we much have more resources placed.”
Rubio said on Fox Business that rural hospitals and communities with fewer than 500,000 residents should get a bigger slice of federal aid, as Democrats have advocated, reiterating a point he made Wednesday in an interview with CQ Roll Call.
Swing-state pressure
Governors from the critical swing states of Michigan, Pennsylvania and Wisconsin are also increasing pressure on the Trump administration for more aid. Trump won all three states in 2016 by less than 1 percentage point.
“Now, more than ever, we need your Administration to work quickly, and without hesitation, with the Congress to support additional resources for all states and localities so that they may address the budgetary shortfalls that have resulted from the unprecedented COVID-19 public health crisis,” wrote Democratic Govs. Gretchen Whitmer of Michigan, Tom Wolf of Pennsylvania and Tony Evers of Wisconsin.
Nonetheless Trump called on Democrats to drop their opposition to a “clean” PPP measure in a Thursday tweet, citing the funding lapse.
Meanwhile, the White House was stepping up its outreach to rank-and-file members. Trump hosted separate calls Thursday morning with House and Senate lawmakers who have been named to a new “task force” on pandemic response efforts. And Vice President Mike Pence had a call with Senate Democrats scheduled for Friday.
Those conversations take place following another devastating jobless claims report from the Labor Department. New applications for unemployment benefits topped 5.2 million for the week that ended April 11. That brings the total for the last four weeks to more than 22 million Americans out of work.
The Thursday numbers mark the first decline in the rate of jobless claims since the figure ballooned for the week ended March 21. New unemployment insurance claims were about 6.6 million for the week ended April 4.
Separately, the Federal Reserve said it had a facility up and running to extend credit to banks based on the value of PPP loans that have been issued. In effect, that preserves the financial institutions’ access to working capital to continue making loans, though without more money from Congress to forgive the loans, at least temporarily.
Lindsey McPherson, Niels Lesniewski, Jim Saksa and Doug Sword contributed to this report.
