Loan Program for Small Businesses Is Tapped Dry

Treasury Secretary Steven Mnuchin and President Donald Trump listen to a question during an April 7 conference call with banks on efforts to help small businesses during the coronavirus pandemic. (AP Photo/Evan Vucci)

WASHINGTON (CN) ­— A new Small Business Administration loan program is out of money, the agency said Thursday amid a deadlock in Congress over new funding to help employers cover payroll and expenses during the coronavirus pandemic.

Republicans in Congress and the White House have been warning that the crush of loan applications from businesses confronting state-ordered closures and stay-at-home guidelines was exhausting the $350 billion set aside for small business relief in the $2.2 trillion coronavirus economic response bill. 

Now, when applicants try to submit an application through the Small Business Administration’s website, they are met with a blue banner that says the Paycheck Protection Program cannot accept new applications “based on available appropriations funding.”

The website also says the agency is unable to bring new lenders into the program. 

Loans issued under the Paycheck Protection Program are forgiven if the small business uses them to cover expenses like payroll, rent and utilities. While the Small Business Administration says the program has run out of money based on the loans already approved, it is not clear how much money has actually flowed into small business’ coffers.

The Small Business Administration said Thursday it has approved more than 1.6 million loans in the two weeks the program has been operating.

Meanwhile, with Congress planning to stay out of town until at least early May, Republicans and Democrats have been unable to reach agreement on additional funding for the program. 

Republicans have sought to fulfill the Trump administration’s request for an additional $250 billion for the program without any other conditions, while Democrats have demanded any additional round of funding also include money for hospitals, states and local governments, plus conditions ensuring the loans go to minority-owned and underserved businesses. 

Last week, Senate Democrats blocked Senate Majority Leader Mitch McConnell’s attempt to unanimously pass the $250 billion small business funding as a stand-alone measure. 

The Senate is scheduled to hold another pro forma session on Thursday afternoon, but it does not appear talks between Senate Minority Leader Chuck Schumer and the administration have yet yielded a deal that could pass both chambers with unanimous support. 

“Republicans have spent a week trying to fund the bipartisan Paycheck Protection Program so more Americans can keep their jobs,” McConnell said in a tweet responding to news that the program is out of cash. “Democrats are blocking the money and making the program run dry.”

Speaker of the House Nancy Pelosi said Thursday that she continues to negotiate with Schumer and Treasury Secretary Steven Mnuchin and that the trio has plans to meet later in the day. 

“We wanted to negotiate on how we could do more for hospitals, state and local government, that is the police, fire, education, etc., as well as recognizing the revenue lost for many of these state municipalities,” Pelosi said during a phone press briefing.

In a floor speech Thursday, McConnell criticized Democrats for not agreeing to a stand-alone funding boost, saying all Senate Republicans are prepared to back the measure. 

“Americans need Democrats to stop blocking emergency paycheck money and let this job-saving program reopen,” McConnell said. “I hope our colleagues will come around soon.”

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