An emergency cash infusion for a hugely popular small-business lending program at the heart of the new $2.3 trillion economic aid package could run into a familiar roadblock this week: Rep. Thomas Massie.
Massie is the Kentucky Republican who objected to clearing the massive relief bill by voice vote on March 27, citing the constitutional requirement that a quorum, or majority, of House members be present for a recorded vote.
After plans to ram through some $250 billion in additional aid for the new Small Business Administration program became clear on Tuesday, Massie voiced his frustration via Twitter. “Folks, this isn’t some esoteric House rule,” Massie wrote. “This is the US Constitution.”
Massie’s objection on the previous bill forced House leaders to bring a majority of lawmakers back to Washington in the midst of various stay-at-home orders for the March 27 vote. Two days later Rep. Nydia M. Velazquez, D-N.Y., announced she had symptoms of COVID-19.
The House ultimately cleared the measure on a voice vote, after denying Massie sufficient numbers to insist on a recorded vote.
This time, there are no such plans to ensure a quorum of members are back in Washington amid what public health officials are calling a critical week to remain at home.
Massie’s comments cast doubt on the quick timeline congressional leaders had discussed earlier in the day, with Senate passage as soon as Thursday and the House clearing the new SBA funds as early as Friday.
Treasury Secretary Steven Mnuchin said Tuesday the new small-business lending program in the law, which started out with $349 billion and just began accepting applications on April 3, is now vastly oversubscribed. He tweeted that the new program needs another $250 billion and that he’s spoken with congressional leaders on both sides of the aisle.
Later on Tuesday, the White House budget request submitted for the funds, totaling $251 billion to bring the total authorization thus far to $600 billion.
Since the program began accepting applications on Friday, the SBA has recorded 220,000 loans for $66 billion, according to the Office of Management and Budget’s acting director, Russell Vought. “Given the level of demand for the program, the Administration believes the funds appropriated for this program will soon be exhausted,” Vought wrote to congressional leaders.
Vought wrote that the additional loans should be made under the same rules as the existing program, and that the window for applying should still close on June 30, as in current law.
“The aim of this request is to meet the immediate demand for the program as authorized and to ensure that employers can keep employees on payrolls for the remainder of the covered period,” he wrote. “This request is not intended to expand program eligibility or the duration of the program.”
Senate Majority Leader Mitch McConnell, R-Ky., said in a statement the Senate is ready to act as soon as Thursday to provide more funds for the so-called Paycheck Protection Program, either by unanimous consent or voice vote as senators aren’t ready to return to Washington.
House Majority Leader Steny H. Hoyer told CQ Roll Call in an interview the House could act as soon as Friday to clear the measure for President Donald Trump’s signature if there’s a bipartisan agreement that would allow it to pass by unanimous consent.
Speaker Nancy Pelosi, D-Calif., concurred in a CNN interview Tuesday that the Small Business Administration needs more money “right away.” But she also suggested that legislative tweaks to the program would be necessary before the House acts.
“We want to make sure the program is administered in a way that does not solidify inequality and how people have access to capital,” Pelosi said. She said she told Mnuchin on Tuesday morning that Democrats would “want to have certain considerations” if they were to go forward with providing more money.
House Minority Leader Kevin McCarthy, R-Calif., said Republicans in that chamber were ready to act quickly as well. But it wasn’t clear how much more time it would take to address Pelosi’s concerns in the emergency funding bill.
Hoyer, D-Md., said Democrats want to ensure smaller women- and minority-owned businesses can get loans under the PPP program, for example.
“Our caucus and members have a great concern about the disadvantage and smaller small businesses who are having trouble making application,” he said. “And of course this is a first-come, first-served program, so we want to make sure that the smallest are not disadvantaged because of their smallness when they need probably some of the most help.”
Senate Minority Leader Charles E. Schumer, D-N.Y., Senate Small Business and Entrepreneurship ranking member Benjamin L. Cardin, D-Md, and Jeanne Shaheen, D-N.H., led a letter to SBA Administrator Jovita Carranza to “recommend that a portion of available PPP funding be reserved for those borrowers who do not have relationships with the traditional lenders that will dominate delivery of PPP Loans.”
Pelosi referred to SBA funding as an “interim package” that won’t hinder efforts to pass another larger aid bill later this month that has things like longer eligibility for expanded unemployment insurance and another round of tax rebates. Both of those items were in the recently enacted $2.3 trillion measure as well.
But it was becoming clear that the SBA program, which got off to a rocky start marred by last-second regulatory guidance, overwhelmed lenders and web site crashes, needed more rapid attention.
“We have days, NOT weeks to address this,” Senate Small Business Chairman Marco Rubio, R-Fla., one of the program’s architects, tweeted Tuesday morning.
The U.S. Chamber of Commerce sent a letter Tuesday morning to the White House and congressional leaders urging them to move fast on replenishing the eagerly sought-after PPP funds. “There is great demand for this,” said Tom Quaadman, an executive vice president at the chamber.
Loan forgiveness, with strings
The program allows small businesses to apply for forgivable loans to cover payroll and some other fixed costs.
The loans cover up to eight weeks of fixed costs, and as long as at least 75 percent of the money goes to paying employees, the principal would be forgiven. The idea is to essentially pay companies to keep employees while the economy is in a medically induced coma so that they can reopen faster when the COVID-19 measures are lifted.
As businesses across the nation have shuttered to slow the contagion’s spread, unemployment figures have rapidly risen. Initial unemployment claims in March topped 10 million, and they will continue to rise. Former Federal Reserve Chairwoman Janet Yellen estimated that unemployment is already at 13 percent — a precipitous increase from 3.5 percent in February — and that the economy may shrink 30 percent in the second quarter on an annualized basis.
SBA figures show that 99 percent of U.S. businesses fall under the economic relief law’s 500-employee threshold, and as many as 47.5 percent of workers could ultimately benefit from the program.
On Monday, Bank of America said it had received 178,000 loan applications totaling $32.9 billion from small businesses.
The small business loan program was one of the first parts of the $2.3 trillion package to begin. The statute also provides the Treasury Department with $454 billion to set up lending facilities through the Federal Reserve to help larger companies stay afloat during the revenue drought caused by the epidemic.
Niels Lesniewski contributed to this report.