America’s $ 350 billion small business lending pot is nearly empty
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Almost all of the U.S. government’s $ 349 billion small business bailout fund has been used up, the Small Business Administration said Thursday, raising fears the program would run out before Republicans and Democrats could close a deal. agreement to replenish it.
The Paycheck Protection Program, which gives small businesses, entrepreneurs and independent traders about 10 weeks of salary spending to keep them afloat during the crisis, had allocated more than $ 339 billion of its funding to about 1 637,000 groups at 9 am Eastern time Thursday, the SBA mentioned. That’s about 97%. 100 of its funding.
An SBA spokeswoman did not give an estimate of how long it would take before funds ran out. If approvals continue at their average rate of $ 2.8 billion an hour recorded on Wednesday, the remaining funds would be depleted by Thursday afternoon.
Negotiations on Capitol Hill to increase program funding by an additional $ 250 billion continue, after disagree was reached last week on additional funding for the PPP.
President Donald Trump has sought to put the blame on Congressional Democrats, who have sought to include funds for hospitals and local governments in any new spending bills.
“Now it’s been so good it’s almost sold out,” Trump said at his daily press conference on Wednesday. “We want to fill it out and we can’t get Democrats to approve it.”
Small businesses have taken to social media and reached out to their local representatives to complain about the difficulties to access the program, which was officially launched on April 3 but delayed at several banks as they struggled with technical and compliance issues.
JPMorgan Chase said Tuesday it has already paid out $ 9.3 billion to companies applying through the program, after being approached by 300,000 companies asking for $ 37 billion. Bank of America said Wednesday it had received 279,000 applications under the program, for a total of $ 43 billion, as of April 8.
Businesses say money is essential for their survival because it allows them to retain their employees while the business is closed or suffers large drops in revenue. The support is structured like a loan, but the funds are written off if the companies can prove that they used the money for payroll or other eligible expenses.
The State Bankers Association, which represents banks of all sizes in the United States, wrote to congressional leaders Thursday afternoon urging them to “quickly increase” funding for the PPP.
“In just under two weeks, PPP provided an economic lifeline to over a million small businesses across the country and enabled these small businesses to remain viable – and maintain their workforce. work – during the Covid-19 pandemic, ”according to the letter, which was signed by banking associations from Alaska to Idaho and Puerto Rico.
Democrats in the Senate opposed the speedy passage of the additional funds. The party responded with its own proposal, which would place restrictions on the additional $ 250 billion for small businesses, in addition to allocating an additional $ 100 billion to hospitals to purchase personal protective equipment and expand testing capacity. ; $ 150 billion more for state and local governments to fight the epidemic while dealing with declining revenues; and a 15 percent increase in food stamp benefits for low-income Americans.
“Democrats know that for the paycheck protection program to be successful, it must work for everyone,” said Nancy Pelosi, Democratic Speaker of the House of Representatives, on Wednesday afternoon. She said her party had called on the government to help “small, underbanked businesses and others struggling to access PPP” as well as “desperate state and local governments” and “frontline hospitals. of the epidemic “.
“As has become clear from last week, [the] The Republicans’ bill, which does not resolve these critical issues, cannot obtain unanimous consent in the House, ”she said.
A spokesperson for Chuck Schumer, the Senate’s top Democrat, said Mr Schumer had been in regular contact with Treasury Secretary Steven Mnuchin, and Democratic House and Senate staff would meet with officials Treasury Wednesday.
Marco Rubio, Republican chairman of the Senate Small Business Committee, said it was “inexcusable” that the PPP “stops tonight”. “Millions of small businesses are in limbo because Democrats refused to put aside partisan politics and fund this bipartisan agenda,” the Florida senator said.
In a joint statement Wednesday, Mr Mnuchin and SBA administrator Jovita Carranza said the agency processed 14 years of loans in less than two weeks and urged Congress to approve additional funds for the PPP. .
“The high demand we have seen underscores the need for hard-working Americans to have access to relief as quickly as possible. We want all eligible small businesses to participate and get the resources they need, ”they said.
The Financial Times is making coverage of the major coronaviruses free to read to help everyone stay informed. Find the latest here.
The House and Senate are both on vacation, and the Capitol complex has been largely closed to slow the spread of the coronavirus. However, the Senate holds a pro forma session on Thursday, and the House will hold a similar session on Friday.
Congress leaders said on Wednesday they “hoped” that a deal could be reached by the end of the week.
House Democratic Majority Leader Steny Hoyer, congressman from Maryland, told reporters on a call Wednesday that if he could not “secure” a deal by Friday, reach a deal by the end of the week would be “optimal”.
Additional reporting by James Politi in Washington
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