WASHINGTON – Treasury Secretary Steve Mnuchin told lawmakers Tuesday that the administration is negotiating the extension of a massive loan program that has helped keep millions of small businesses afloat during the coronavirus pandemic.
The Paycheck Protection Program already has disbursed more than $500 billion to roughly 4.8 million businesses, most of them mom-and-pop outfits such as nail salons and retail stores. But the program ends Tuesday with $130 billion left unallocated and scores of hospitality businesses teetering on the brink of insolvency.
Mnuchin told the House Financial Services Committee that he's already in talks with senators about passing another round of economic stimulus that would use the leftover PPP money “and extending it to business that were most hard hit … like restaurants and hotels where it is critical to get people back to work.”
Congressional leaders and administration officials who negotiated the economic stimulus measure in March known as the CARES Act that created the PPP are discussing next steps amid a pandemic that has claimed 125,000 lives, caused the highest unemployment in decades and upended daily life.
Not only does the PPP end Tuesday, but the federal boost in unemployment benefits ends July 31 at a time when states are seeing new surges in infections and are proposing layoffs to balance budgets hammered by the pandemic.
"We're not out of this thing by any stretch of the imagination," said Rep. Ed Perlmutter, D-Col., a member of the committee. "I see a brick wall at the end of July."
House Democrats passed the HEROES Act in May. The measure would steer billions to financially socked states and local governments and provide a second round of direct payments to millions of Americans. It was panned by Senate Republicans and declared "dead on arrival" by President Donald Trump.
At more than $3 trillion, the HEROES Act (the Health and Economic Recovery Omnibus Emergency Solutions Act) would be larger than the four previous economic stimulus packages combined that Congress has approved since March to combat the coronavirus.
Among the measure’s more prominent elements:
- $200 billion for a “heroes fund” that would provide “hazard pay” to essential employees such as front-line health care workers.
- $75 billion to beef up testing and contact tracing.
- A second round of economic impact payments of $1,200 per family member, up to $6,000 per household.
- Extension of weekly $600 federal unemployment payments through January.
- $175 billion to help renters and homeowners make monthly rent, mortgage and utility payments and other housing-related cost.
Neither Mnuchin or Federal Reserve Board Chair Jerome Powell, who appeared together at Tuesday's hearing, endorsed the House bill.
But Powell said that while recent economic data offer some positive signs, more than 20 million Americans have lost their jobs and the pain has been disproportionately shouldered by lower-wage workers, women, Black Americans and Hispanic Americans.
"The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus," Powell told the committee. "A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities."
The PPP offers firms employing 500 or fewer workers low-interest loans of up to $10 million to cover their pandemic-related costs over eight weeks. Companies apply for the money through banks and other lenders that certify the loans, which are underwritten by the Small Business Administration.
The program has come under fire for including how hundreds of publicly traded companies received Paycheck Protection Program loans meant for small businesses. After initially rebuffing requests to disclose the list of PPP recipients, Mnuchin told lawmakers Tuesday the list of those receiving at least $150,000 under the program would be released by the end of this week.
Restaurant owners said they've had trouble taking advantage of the program because it requires that borrowers spend most of the money on keeping workers on the payroll for the loans to be forgiven.
The administration recently lowered that requirement from 75% to 60%, among several changes, but many restaurants said the threshold remained too high.
Florida GOP Sen. Marco Rubio, who chairs the Senate Committee on Small Business & Entrepreneurship, told reporters on Capitol Hill Tuesday that he wants to see more money flowing to underserved communities – though not necessarily through the PPP.
"I'm very concerned that a lot of minority businesses, particularly Black-owned businesses already struggling to begin with, have access to capital," he said.
Content originally published by USA Today
on June 30, 2020.