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Treasury seeks additional $250 billion to replenish small business coronavirus program

Congress is considering an additional $250 billion to help new small businesses.
Congress is considering an additional $250 billion to help new small businesses.Associated Press/Susan Walsh, File 2020/Associated Press

WASHINGTON — Treasury Secretary Steven Mnuchin on Tuesday asked congressional leaders to swiftly commit another $250 billion to replenish a new small business coronavirus program that is being overwhelmed by surging demand.

Republicans plan to push the matter in Congress immediately. Senate majority leader Mitch McConnell, Republican of Kentucky, said on Tuesday that he hoped to bring the matter up for a vote by Thursday as small businesses are flooding the $349 billion Small Business Administration program in order to seek emergency relief. Democrats haven’t rejected the proposal, but they have said they want to prioritize other assistance, such as hazard pay for workers.

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The Small Business Administration initiative, called the Paycheck Protection Program, was created as part of the $2 trillion coronavirus stimulus bill enacted late last month. It launched Friday and allows companies with fewer than 500 employees to seek loans from banks that are meant to offset the recent disruption caused by the coronavirus pandemic. Since the program launched, banks and the SBA have been overwhelmed with applications. Senator Marco Rubio, Republican of Florida, who wrote the program into the bill, has led the charge in requesting more money.

McConnell said he would speak with Senate minority leader Chuck Schumer, Democrat of New York, and ‘‘hope to approve further funding for the Paycheck Protection Program by unanimous consent or voice vote during the next scheduled Senate session on Thursday.’’

Many businesses have laid off workers as their revenue evaporated when millions of Americans were ordered to stay home in an effort to stop the coronavirus’s spread. In order to try to prevent an even bigger flood of layoffs, Congress created the program. The loans are forgivable, meaning they don’t have to be repaid if companies meet certain requirements in terms of employee retention.

The White House and Treasury Department have devoted enormous resources to get this program up and running, spending less time on other elements of the rescue law — including an expansion of unemployment insurance and payments to individuals.

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Businesses with fewer than 500 employees are eligible for loans of up to $10 million. .

Bank of America said Monday that it had received 178,000 applications from firms seeking $32.9 billion in loans.

Wells Fargo did not begin taking applications until Saturday and by Monday morning said it had reached the $10 billion cap it had set for loans under the program. To deal with the crushing demand, the Federal Reserve launched a system for banks to offload these assets so they could originate more loans.

Democrats and Republicans have commented in recent days that the $349 billion program would likely need to be expanded, but Democrats have called for additional measures, such as more unemployment insurance benefits for laid-off workers. Senate Democrats on Tuesday asked Mnuchin and SBA Administrator Jovita Carranza to ensure that a portion of the small business funding was directed toward companies owned by women, minorities, and veterans, among others, particularly in rural and underserved areas.

Schumer and other Democratic senators also said they would pursue legislation to provide hazard pay equivalent to $25,000 yearly for workers who have been forced to remain on the job during the pandemic.

They could try to use the GOP demand for small business funding as leverage to include it in the next rescue bill.

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‘‘All I’m going to say is that this is one of our very highest priorities’’ for the next bill, Schumer told reporters, referring to the hazard-pay addition.

House minority leader Kevin McCarthy, Republican of California, tweeted on Tuesday that ‘‘the demand for the Paycheck Protection Program has been overwhelming.’’

He wrote that he had spoken with Mnuchin on Tuesday morning and supports ‘‘his request for more money for America’s small businesses. Following the Senate’s approval, the House should move swiftly to do the same.’’

Other Republicans also called for urgent action.

This program is supposed to encourage small businesses to stop laying off employees, after 10 million workers sought unemployment claims late last month. The unemployment rate is expected to surge far beyond 10 percent this spring, and some analysts say it could stay there into next year. White House officials have said they want to help enact policies that will lead to a sharp economic rebound this year, but economists have predicted that is unlikely to occur.

Small businesses, which employ nearly half of the United States’ private sector workers, have said they are facing long waits, confusing rules, and rejection as they scramble to secure loans through the fund. Many banks have restricted access to their existing customers and say that while they have begun processing the loans, they lack the proper SBA paperwork to finish the process.

There are still some unanswered questions about how the program works, including what kind of documentation they need to collect from the small businesses, banking industry officials say.

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