The small business rescue fund set up by Congress exhausted its $350 billion funding capacity Thursday morning and will wait until at least next week for any movement on Capitol Hill.
Congressional Democrats continued their talks with President Donald Trump’s administration on Thursday on whether there’s a deal that can pass Congress unanimously. But Senate Majority Leader Mitch McConnell (R-Ky.) said there’s been “absolutely no progress” and the Senate quickly adjourned on Thursday until Monday. The House will next be in on Friday.
Without additional funding, banks and the Small Business Administration will be unable to approve more of the Paycheck Protection Program loans designed to avert layoffs during the coronavirus pandemic, which can be forgiven if businesses agree to maintain their payrolls.
But Congress is deadlocked over how to allocate more money for the popular loan program, with Democrats continuing to oppose the GOP’s $250 billion infusion for the fund without equal aid for hospitals and local governments. The impasse is now in its second week.
“It’s not that we don’t share the values of small businesses, we do, we have been their champions,” Speaker Nancy Pelosi (D-Calif.) said in a call with reporters Thursday. “But in order for them to succeed, people have to be well, people need to be safe and we need to have state and local [funding].”
McConnell retorted incredulously: “It’s absolutely surreal to see Democratic leaders treat support for workers and small businesses as something they need to be goaded — goaded— into supporting.”
Staff for Pelosi and Senate Minority Leader Chuck Schumer (D-N.Y.) spoke with Treasury Secretary Steven Mnuchin and his department on Thursday, according to several sources close to the negotiations. Trump told senators on a new economic task force in a phone call Thursday that he wants to work with Democrats to get a deal on the small business funds, according to a Democrat familiar with the call.
But congressional Republicans remain skeptical that Mnuchin will be able to cut a deal that all Senate and House Republicans will support. McConnell would only say Republicans would “take a look at” any potential deal.
“We don’t have the luxury of time here,” said Sen. Roy Blunt (R-Mo.). “I would be open to that discussion, but I’m open to that discussion being very narrowly focused.”
Pelosi says McConnell’s small business-only bill can’t pass the House unanimously.
The California Democrat, who went to great pains to tout Democrats’ support for small businesses during her weekly press call, said she was hopeful a deal would emerge from the talks with Mnuchin. But Pelosi insisted that Democrats weren’t relenting on the demands they outlined more than a week ago.
Sen. Joe Manchin (D-W.Va.), among the most conservative Democrats in Congress, said in an interview that he was comfortable fighting to include funds for hospitals and states in the interim spending measure.
Republicans are “going to object to helping hospitals that are going to go under, and this is a medical crisis? Then God help us. Let it be on them. I don’t blame Chuck for fighting for that. I can fight for that,” Manchin said. “I’ve got cities and municipalities that cannot keep their police forces and their sanitation systems operating.”
Last week, Democrats blocked the small business bill and McConnell blocked a bill from them that married the Paycheck Protection Program funding with $250 billion for hospitals and local governments.
Centrist Sen. Kyrsten Sinema (D-Ariz.) expressed frustration with the impasse and endorsed a bill solely funding the Paycheck Protection Program: “The Senate should approve [additional] funding by unanimous consent ASAP. Small businesses need our help to survive during this emergency.”
But Democratic leaders haven’t budged, citing requests for more aid from governors in states like Maryland, Pennsylvania, Michigan and Wisconsin as they dig in.
“The question is of the Republicans, why are you ignoring your state?” Pelosi said Thursday. “We all know we want to help small business, why would you turn your backs on the hospitals who are delivering services?”
Senate Small Business Committee Chairman Marco Rubio (R-Fla.) called the Democrats’ stance “disgusting” on Twitter. He, like many Republicans, have said they are open to giving more money to other priorities but only after the exhausted Paycheck Protection Program fund is replenished.
The SBA said Thursday it will be unable to accept new loan applications while funding is tapped out and that it will not enroll additional lenders into the program. The agency said it approved more than 1.6 million loans so far.
House Small Business Chairwoman Nydia Velazquez (D-N.Y.) said a lack of data over who is receiving the loans “has left unanswered questions as to whether taxpayer funding is going to those the program was intended to serve.”
“Before Congress allocates billions of additional dollars, the administration must show a greater commitment to transparency,” she said.
Some on Capitol Hill believe the brinkmanship could continue until next week, or possibly until May if a deal is not reached quickly.
“We urge Congress to appropriate additional funds for the Paycheck Protection Program—a critical and overwhelmingly bipartisan program—at which point we will once again be able to process loan applications, issue loan numbers, and protect millions more paychecks,” Mnuchin and SBA Administrator Jovita Carranza said in a joint statement Wednesday evening.
The impasse over funding is the latest setback for the aid effort, which was just beginning to disburse money to struggling small businesses after a rocky April 3 launch.
The banking industry this week had just started to report that it was disbursing tens of billions to small businesses after receiving well over 1 million applications. Some bankers worked through the night to send applications to the SBA for approval as the funding limit approached.
“Running out of money will be problematic for Main Street,” Tioga State Bank President and CEO Robert Fisher said. “Many small businesses will be left holding their applications. We are trying to help as many businesses as possible, but we know the window is closing.”
At the kickoff of the program, lenders at first lacked guidance from the Trump administration on how to process applications and then ran into severe technical obstacles with an unstable SBA system used to approve the loans. It took until last week for banks to get guidelines on the documentation needed to disburse funds to borrowers. Self-employed individuals were able to apply for the loans in a second wave starting Friday, but banks didn’t have instructions on how to process their loans until this week.
Banks including Wells Fargo planned to continue taking applications as Congress figured out a way to restart the program. Bank lobbyists urged the SBA and Treasury Department to release guidance on how lenders should keep processing loans in the interim.