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Lawmakers at Standstill as Small Business Loan Funding Runs Low

Posted on Apr. 16, 2020

Lawmakers are at an impasse on further funding the government's small business loan program as Democrats request a broader bill to help local and state governments fight the coronavirus.

House Majority Leader Steny H. Hoyer, D-Md., told reporters April 15 that he hopes an agreement on an interim deal to replenish funding for the Paycheck Protection Program (PPP) can be reached before the end of the week.

Lawmakers from both parties have acknowledged that most of the $349 billion in PPP funding set aside under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) has already been used, with the expectation that the rest will be gone by the end of the week.

Senate Minority Leader Charles E. Schumer, D-N.Y., told reporters during a separate April 15 conference call that he anticipates an agreement can be reached by April 17.

Senate Majority Leader Mitch McConnell, R-Ky., tried to increase funding last week but was unable to strike a deal with Democrats on how to administer the second tranche of cash for the small business loans program. In addition to running out of money, the program has come under pressure from tax practitioners and businesses confused by its complexity, forcing the Trump administration to clarify areas of the new law.

The Small Business Administration released an interim rule April 14 to clarify that a partner in a partnership can’t submit a separate application for a PPP loan as a self-employed individual. The guidance helps answer some of the questions that have plagued the program since its inception. Democrats, however, have focused on the program’s lack of availability.

Hoyer was adamant that lawmakers need to diversify the program to benefit all types of companies to further help minority-owned businesses that lack the same access as others. Democrats also want to provide states with the help they need.

Hoyer said that some Republicans would be on board with the idea of helping states, tribes, and localities. In a proposal put forward by Senate Finance Committee member Benjamin L. Cardin, D-Md., and Sen. Chris Van Hollen, D-Md., states and municipalities would receive up to $150 billion in additional funding. Hoyer said that the governors he has been in contact with would like more, with a figure up to $500 billion being touted.

But any such increase would likely be part of another CARES Act package currently being worked on by Democratic lawmakers, Hoyer said. He also indicated that taxpayers could expect another stimulus check.

However, the timing of a new legislative package remains up in the air after Hoyer postponed the return of the House until May 4. McConnell announced that the Senate would follow and return May 4 as well. Both chambers had been expected back in session on April 20.

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