WASHINGTON — Treasury Secretary Steven Mnuchin on Tuesday asked congressional leaders to swiftly commit another $250 billion to replenish the new $349 billion small business coronavirus program that is being overwhelmed by surging demand.

President Trump said banks have processed $70 billion in taxpayer-backed loans for 250,000 small businesses since Friday, as companies seek emergency help to deal with the enormous business disruption caused by the pandemic.

He did not say, though, how many of those loans have been approved or how many firms have received any of the money. And his data suggest the program has so far reached only a small fraction of U.S. companies, as there are 30 million small businesses in the United States that employ a total of 60 million people.

“We’ll be running out of money pretty quickly, which is a good thing in this case, not a bad thing,” Trump told reporters.

Republicans will try to advance the matter through Congress immediately. Senate Majority Leader Mitch McConnell said he hoped to pass the cash infusion through the Senate on Thursday. The program allows companies with fewer than 500 employees to seek taxpayer-backed loans from banks, and these loans are forgivable if the companies meet certain worker-retention metrics, among other things. The federal government would then reimburse the banks for making the loans.

Democrats haven’t rejected the White House request but they have said they want to include other emergency aid, such as hazard pay for workers, as part of any new deal.

The Small Business Administration initiative, called the Paycheck Protection Program, was created as part of the $2 trillion coronavirus rescue bill enacted late last month. Many companies are scrambling for assistance, as the entire U.S. economy has been upended because of rolling shutdowns ordered by state and local governments. As Americans stay home and many of these companies close their doors, their revenue has fallen sharply. Many have laid off workers but still face rent and utility payments, among other things.

The surge in demand for these loans overwhelmed the loan systems at many banks and a number of firms found the process impossible to navigate on Friday. Some 250,000 companies have had their applications processed, according to Trump, but it could not be learned how many had actually applied.

The White House has made numerous adjustments to the program in the past week to expand it for applicants and make it more attractive to banks originating the taxpayer-backed loans. They have raised the processing fee that banks can charge and ensured that churches and faith-based firms can apply, among other things.

Sen. Marco Rubio, R-Fla. – who spearheaded the program – has led the charge in demanding more money.

McConnell said he would speak with Senate Minority Leader Charles E. Schumer, D-N.Y., and would “hope to approve further funding for the Paycheck Protection Program by unanimous consent or voice vote during the next scheduled Senate session on Thursday.”

That would require Democrats to agree. Schumer declined to answer questions during a conference call with reporters Tuesday about how Democrats planned to proceed, but he made clear they were pushing for other priorities, including ensuring the payment of hazard pay equivalent to $25,000 yearly for workers who have been forced to remain on the job during the pandemic.

Democrats could try to use the GOP demand for small business funding as leverage to advance other priorities as well. Tuesday evening, House Speaker Nancy Pelosi held a conference call with other Democratic leaders where she indicated she plans to work with House and Senate Democratic leaders to compile a list of their priorities to guide negotiations with Mnuchin, according to a person familiar with the call who spoke on condition of anonymity to discuss it.

The White House and Treasury Department have devoted enormous resources to get the PPP up and running, spending less time on other elements of the rescue law –including an expansion of unemployment insurance and $1,200 direct payments to individuals.

As part of the PPP, businesses with fewer than 500 employees are eligible for loans of up to $10 million. The loans will be forgiven, meaning business owners will not have to pay them back, if they meet certain requirements, including using 75 percent of the money to retain or rehire employees. Businesses can receive a $10,000 loan advance that does not have to be repaid, SBA has said. It’s unclear if the Treasury Department or SBA will ever disclose the identities of the companies receiving the taxpayer-funded loans.

Bank of America said Monday it had received 178,000 applications from firms seeking $32.9 billion in loans as companies clamor to qualify for the $349 billion SBA program.

Wells Fargo did not begin taking applications until Saturday and by Monday morning said it had reached the $10 billion cap it had set for loans under the program. To deal with the crushing demand, the Federal Reserve launched a system for banks to offload these assets so they could originate more loans.

Democrats and Republicans have commented in recent days that the $349 billion program would probably need to be expanded, but Democrats have called for other extensions too, such as more unemployment insurance benefits for laid off workers. Senate Democrats on Tuesday asked Mnuchin and SBA Administrator Jovita Carranza to ensure that a portion of the PPP funding was directed toward companies owned by women, minorities, and veterans, among others, particularly in rural and underserved areas.

In an interview Tuesday with CNN, Pelosi said Democrats would want to ensure “certain considerations” were in place before agreeing to Mnuchin’s request for more funding for the program.

“We want to make sure that the program is administered in a way that does not solidify inequality in how people have access to capital, but instead (is a) benefit to everyone who qualifies for it,” Pelosi said.

At the same time, some Democrats said the program might have to grow even more. In an interview with The Washington Post, House Ways and Means Chairman Richard E. Neal, D-Mass., said he, Pelosi and other lawmakers had spoken with Mnuchin, and urged the secretary to relax the limits on the program so businesses with up to 1,000 employees can apply. Neal said Democrats also told Mnuchin he might have to ask for even more than $250 billion.

“We urged him to go higher,” Neal said Democrats told Mnuchin. “You might need to get it up to a trillion.”

While some lawmakers have pressed the Treasury Department and SBA for more guidance on how the program works, the loudest calls have been for an expansion of the program. House Minority Leader Kevin McCarthy, R-Calif., tweeted on Tuesday that “the demand for the Paycheck Protection Program has been overwhelming.”

He wrote that he had spoken with Mnuchin on Tuesday morning and “support his request for more money for America’s small businesses. Following the Senate’s approval, the House should move swiftly to do the same.”

The program is supposed to encourage small businesses to stop laying off employees, after 10 million workers sought unemployment claims late last month. The unemployment rate is expected to surge far beyond 10 percent this spring, and it could stay there into next year. White House officials have said they want to help enact policies that will lead to a sharp economic rebound this year, but economists have predicted that is unlikely to occur.

Small businesses, which employ nearly half of the United States’ private-sector workers, have said they are facing long waits, confusing rules and rejection as they scramble to secure loans through the fund. Many banks have restricted access to their existing customers and say that while they have begun processing the loans, they lack the proper SBA paperwork to finish the process and turn the money over to the businesses.

There are still some unanswered questions about how the program works, including what kind of documentation they need to collect from the small businesses, banking industry officials say.

Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.

filed under: