WASHINGTON — Treasury Secretary Steven Mnuchin on Tuesday asked congressional leaders to swiftly commit another $250 billion to replenish a new small business coronavirus program that is being overwhelmed by surging demand.
Republicans plan to push the matter in Congress immediately. Senate Majority Leader Mitch McConnell, R-Kentucky, said on Tuesday that he hoped to bring the matter up for a vote by Thursday as small businesses are flooding a new $349 billion Small Business Administration program in order to seek emergency relief. Democrats haven’t rejected the proposal, but they have said they want to prioritize other assistance, such as hazard pay for workers.
The Small Business Administration initiative, called the Paycheck Protection Program, was created as part of the $2 trillion coronavirus stimulus bill enacted late last month. It launched Friday and allows companies with fewer than 500 employees to seek loans from banks that are meant to offset the recent disruption caused by the coronavirus pandemic. Since the program launched, banks and the SBA have been overwhelmed with applications. Sen. Marco Rubio, R-Florida — who wrote the program into the bill — has led the charge in requesting more money.
McConnell said he would speak with Senate Minority Leader Chuck Schumer, D-New York, and “hope to approve further funding for the Paycheck Protection Program by unanimous consent or voice vote during the next scheduled Senate session on Thursday.”
Many businesses have laid off workers as their revenue evaporated when millions of Americans were ordered to stay home in an effort to stop the coronavirus’s spread. In order to try and event an even bigger flood of layoffs, Congress created the PPP. The loans are forgivable, meaning they don’t have to be repaid if companies meet certain requirements in terms of employee retention.
The White House and Treasury Department have devoted enormous resources to get this program up and running, spending less time on other elements of the rescue law — including an expansion of unemployment insurance and payments to individuals.
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 conditions, including using 75% of the money to retain or rehire employees. Businesses can receive a $10,000 loan advance that does not have to be repaid, the SBA has said.
Bank of America said Monday that 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 likely need to be expanded, but Democrats have called for additional measures, 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.
Bank of America’s chief executive, Brian Moynihan, and several community bankers are expected to participate in an afternoon call with President Donald Trump about the program, according to industry officials.
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, known as the Paycheck Protection Program. 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.
Community bankers have been particularly concerned that once more big banks begin processing loans — Citigroup went online Monday —