Senate Democrats Block Expansion of Forgivable Small Business Loans Under ‘Paycheck Protection Program’
Should Congress increase funding for the forgivable Paycheck Protection Program small business loans?
by Countable | 4.9.20
UPDATE - 4/9/20 (10:38am EDT): Senate Democrats took to the floor Thursday to block Senate Majority Leader Mitch McConnell’s (R-KY) unanimous consent request to pass a bill to boost funding for forgivable small business loans under the Paycheck Protection Program (PPP) by $250 billion, amid concerns that it may soon deplete the initial $350 billion provided under the CARES Act. More than $100 billion in forgivable PPP loans have been made to small businesses during the first four business days it’s been in operation.
Earlier in the week, it became clear that high demand for PPP loans required Congress to approve additional funding for the Small Business Administration’s program, Treasury Secretary Steve Mnuchin held talks with bipartisan leaders in the House & Senate on Tuesday in the hope of passing additional funding during this week’s pro forma sessions.
When House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY), requested an additional $100 billion for healthcare providers plus $150 billion for state & local governments. The Trump administration signaled that funding would be acceptable in a broader “phase 4” coronavirus bill later once Congress returns in full ― but only a clean bill to expand the PPP could be signed into law this week.
Nonetheless, Sens. Ben Cardin (D-MD) and Chris Van Hollen (D-MD) went to the floor Thursday and objected to McConnell’s unanimous consent request to pass the clean PPP expansion bill, and to offer their own bill. The Cardin-Van Hollen bill included $125 billion in PPP loans, plus another $125 billion in small business funding through other programs and the additional funding for healthcare providers, states, and cities as requested by Pelosi & Schumer ― but Van Hollen’s unanimous consent request was objected to by McConnell.
The next potential action in Congress could occur Friday in the House during its pro forma session, although it’s unclear whether there will be an attempt to pass any legislation. The Senate will return for another pro forma session on Monday.
Countable’s original article appears below.
Congress is racing to approve an additional $250 billion in funding for forgivable small business loans through the Small Business Administration’s Paycheck Protection Program (PPP) before the end of the week after high demand raised concerns that the PPP’s initial $350 billion allotment under the CARES Act will soon be depleted.
With both chambers formally on recess but pro forma sessions scheduled for Thursday in the Senate and Friday in the House, Congress may approve the additional funding for the program through voice votes or unanimous consent while most lawmakers remain at home in their districts. It’s expected that the legislation will be more of a slimmed-down “phase 3.5” relief bill that adds to the CARES Act rather than a full-fledged “phase 4” coronavirus bill, the latter of which is still being discussed at a high-level and won’t come up until Congress returns in full.
However, there may be obstacles to a speedy approval for the additional funding. House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) have said they want half of the additional small business loan funding to be set-aside for community banks that serve women and minority-owned businesses. They also want to tack on an additional $100 billion in funding for healthcare providers plus $150 billion more for state & local governments, after the CARES Act provided initial infusions in those amounts for those sectors when it was signed into law on March 27th by President Donald Trump.
Senate Majority Leader Mitch McConnell (R-KY) and the Trump administration have signaled that they’re willing to discuss including additional funding for healthcare providers, state, and localities in the “phase 4” coronavirus package when Congress returns in full. However, it won’t be in the legislation the Senate tries to pass by unanimous consent Thursday morning. McConnell tweeted Wednesday night:
“Tomorrow morning, I’ll ask unanimous consent to pass standalone emergency funding for the hugely popular Paycheck Protection Program that is saving small-business jobs as we speak. As the rest of the CARES Act continues to come online, this key part is already low on funds. Nobody thinks tomorrow will be the Senate’s last word on COVID-19. Other crucial parts of the CARES Act, like its historic funds for hospitals and healthcare providers, are still coming online and have not yet been exhausted. The PPP is where the lights are already flashing red. If we want to act fast, Congress has to focus. There is no realistic chance that another sprawling bill which allocates half a trillion dollars to a number of priorities, even important ones, will be able to pass the Senate or the House by unanimous consent this week.”
Passing legislation by unanimous consent can be a precarious proposition in either chamber of Congress. It only takes one lawmaker to raise an objection and block the immediate consideration of the bill. When the House tried to pass the “phase 3” CARES Act by unanimous consent, members signaled their objections which caused the House to resort to a voice vote. The bill eventually passed on a voice vote despite an attempt by Rep. Thomas Massie (R-KY) to invalidate the vote due to the lack of a quorum.
Why is the additional funding needed for the PPP?
The PPP officially went live on April 3rd, and after three business days more than $66 billion in loans were approved for more than 220,000 small businesses ― while both the number of applications submitted and lenders participating have grown each day. As more lenders of all sizes engage with small businesses in the program, the volume and value of PPP loans approved will increase.
So far, much of the lending has been done by community banks and Bank of America, which has provided more than $30 billion in financing to its existing small business banking clients. Other large banks are slowly increasing their participation in PPP loans: JPMorgan Chase began offering them to existing small business clients and Wells Fargo, which believed it was constrained by a cap imposed by the Federal Reserve, can make loans after the cap was temporarily lifted by the Fed.
Demand for PPP loans will increase further on April 10th, when people who are self-employed, independent contractors, and “gig economy” workers will be eligible to submit applications.
For more information on how to apply for Paycheck Protection Program (PPP) loans, check out our guide here.
— Eric Revell
(Photo Credit: iStock.com / Kanawa_Studio)
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