The Small Business Administration on Thursday reached its limit for issuing new forgivable small-business loans as Democratic leaders and the Trump administration prepared to resume talks over the next COVID-19 relief package.
After backing out fees paid to lenders and other processing costs, the SBA ran out of cash to distribute loans this morning, according to Senate Small Business and Entrepreneurship Chairman Marco Rubio, R-Fla.
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 so-called Paycheck Protection 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.
Rubio said on Fox Business that he also wanted to help the “underbanked” in communities where relationships with established lenders are scarce.
Democrats are also pushing for an additional $250 billion in aid to states, localities and hospitals, doubling the amount provided in last month’s huge relief bill.
“State and local and hospital are two arenas in which we must have more resources placed,” Pelosi said Thursday. “So that’s where we’re right now having the discussion.”
Rubio said 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.
Governors from the critical swing states of Michigan, Pennsylvania and Wisconsin are also increasing pressure on the Trump administration for more aid. President Donald 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.
It wasn’t clear if the high-level talks between Democrats and the Trump administration would bear fruit in time for the Senate’s 3 p.m. pro forma session, where it might be possible to pass legislation by unanimous consent.
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 on Thursday afternoon.
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.
The post Small-business loan fund runs out as aid talks drag on appeared first on Roll Call.
