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House Approves Interim Small Business Loan Funding Package

Posted on Apr. 24, 2020

The House overwhelmingly approved a package to further fund a small business loan program as Democrats set their sights on more legislation to help states and local governments amid the coronavirus pandemic.

The bill (H.R. 266) would provide $484 billion in aid to replenish the depleted Paycheck Protection Program (PPP), aid hospitals, and increase testing to combat COVID-19. Democrats said the bill, passed April 23, was a major victory after further negotiation with Republicans led to an additional $100 billion to fund hospitals and increase testing.

The new small business loan funding includes $60 billion for community banks that would help smaller businesses that missed out on the last round of loans. “Channeling a minimum of $60 billion of this new funding through community institutions should help many small businesses that missed out on the first round, including minority-owned and women-owned businesses,” said House Ways and Means Committee member Dwight Evans, D-Pa.

The measure has come under fierce criticism after large publicly traded corporations were able to extract substantial loans and deplete the program. The Small Business Administration and Treasury updated an FAQ April 23 to clarify that applicants seeking a PPP loan that are public companies with substantial market value and access to capital markets likely can’t certify in good faith that they need that loan.

What’s Next

Funding state and local governments has emerged as a priority for many lawmakers. Democrat after Democrat called on Republicans to help them include a funding proposal in an upcoming relief package.

“State and local government desperately need our help,” Ways and Means Committee member Donald S. Beyer Jr., D-Va., said. Rising unemployment numbers throughout the country and a drop in sales have left local governments short on income and sales tax revenue.

The call for additional funding was amplified after Senate Majority Leader Mitch McConnell, R-Ky., said he would oppose funding for states, instead telling radio talk show host Hugh Hewitt that he would rather see a bankruptcy scheme developed for states.

Federal bankruptcy laws don’t allow states to file for bankruptcy. McConnell's comments were met with a harsh rebuke from Rep. Peter T. King, R-N.Y., who said McConnell’s stance would hurt all Americans.

Ways and Means Committee Chair Richard E. Neal, D-Mass., said making sure cities and municipalities can pay emergency responders will be a priority in the next bill. Democrats also want to focus on extending unemployment insurance and dispensing another economic stimulus check.

No timeline exists for when another legislative package is expected. McConnell has made it clear that he wants to convene the Senate on May 4 before starting discussions on another measure.

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