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Democratic and Republican lawmakers on Thursday looked like they might fail to reach a deal that would replenish an aid program for small businesses hit by the coronavirus crisis, even as the program involved has run out of money.
Analysts were predicting Congress could achieve an agreement next week on the Paycheck Protection Program, but not before the Senate’s pro-forma session that was slated to come at 3 p.m. Eastern Time Thursday. There previously had been hopes the Republican-led Senate could approve a PPP deal on Thursday afternoon, with the Democratic-run House then following suit on Friday.
Meanwhile, the Small Business Administration said Thursday that the PPP was out of money, so the SBA could no longer accept new applications for loans and couldn’t enroll new lenders.
“There is little hope that Congress can strike a deal today to prevent the funding shortfall,” analysts at Height Capital Markets said in a Thursday note. The issue may be worked out next week, as both parties have incentives to fund the program, the Height team said. But the analysts warned that while most members of the Democratic-run House and Republican-led Senate are away from Washington, D.C., legislation must be passed with no opposition, which can be hard to come by.
Republican lawmakers and the Trump administration have sought an additional $250 billion for PPP. The loan program for small businesses initially received $350 billion in last month’s $2.2 trillion coronavirus package, known as the CARES Act or Washington’s “Phase 3” virus legislation.
Democrats have pushed for that extra $250 billion for PPP to get packaged with other provisions, such as $100 billion for health-care institutions, $150 billion for state and local governments, and extra help for food-stamp recipients. They also want more of the PPP loans channeled through community-based financial institutions that serve a diverse range of enterprises.
Read more:SBA touts loan approvals, but there’s little evidence small businesses are seeing cash
And see:How Congress is spending trillions in response to the coronavirus crisis — in one chart
“We’re just saying we can’t allow the billions — hundreds of billions of dollars — being spent to fight the horror of the coronavirus and the impact on our economy, to further harden the disparity, the lack of access to credit for so many in the small-business community,” House Speaker Nancy Pelosi, the California Democrat, told CNN on Wednesday afternoon.
“We want to support the small businesses, all of them, and support the PPP and hope that we can work together to do that. Having said that, what the Republicans are proposing will not get unanimous consent in the House of Representatives,” she added.
Senate Majority Leader Mitch McConnell, the Kentucky Republican, and House Minority Leader Kevin McCarthy, the California Republican, didn’t sound like they would budge in a joint statement released late Wednesday.
“The cost of continued Democratic obstruction will be pink slips and shuttered businesses,” McConnell and McCarthy said. “We hope Democrats see reason soon and finally heed Republicans’ repeated calls for a funding bill that can quickly earn unanimous consent from all 100 senators and become law.”
Related:Small-business owners express confusion, fear over federal bailout fund
And see:Coronavirus small-business aid program could ultimately need $1.8 trillion in funding
When asked by a reporter on Thursday about making concessions or offering a “fig leaf” to Democrats, McCarthy dismissed the need for that. “Why would you have to offer a fig leaf, if people are out of work, and here’s money to keep people employed in the small businesses?” the GOP congressman told reporters on a conference call. “Just say yes.”
Separate from the fight between the Republican-led Senate and Democratic-run House’s leaders, Republican Rep. Thomas Massie of Kentucky has signaled he doesn’t support a quick approval for additional PPP money and could throw a wrench in the process.
In addition to boosting the PPP, which some analysts are describing as a “Phase 3.5” response, Democratic and Republican lawmakers and the Trump administration are working on “Phase 4” legislation targeting the coronavirus crisis. Analysts have predicted that next big spending package, also called CARES 2, could cost about $1 trillion and not become a reality for several weeks.
U.S. stocks DJIA, -0.80% SPX, -0.15% have been plunging for weeks on coronavirus-related worries but have pared some of their losses thanks in part to hopes surrounding Washington’s aid programs.
Robert Schroeder contributed to this report.
