A partisan stalemate deepened Thursday over the next steps needed in providing coronavirus financial relief.

The impasse derailed an attempt by Senate Republicans to add $251 billion to a dwindling fund for small-business loans, as Democrats pushed for a broader relief effort.

Senate Majority Leader Mitch McConnell sought unanimous consent for legislation to replenish the loan fund, but Senate Small Business and Entrepreneurship Committee ranking member Benjamin L. Cardin objected.

That was after McConnell, R-Ky., objected to amending the GOP legislation with Democrats’ proposal for a broader, $500 billion-plus aid package. That measure would make changes to the small-business program, including allocating a portion of the funds to rural and underserved communities while tacking on additional relief for states, hospitals and low-income households.

Leaders of both parties made clear they disagreed over how quickly more money is needed for small-business loans and whether the next package must include more funding for hospitals and state and local governments, among other things.

“This morning we learned that 6.6 million Americans filed for unemployment in just the last week,” McConnell said. “We need more funding and we need it fast.”

Addressing Democrats, McConnell added: “Do not block emergency aid you do not even oppose just because you want something more.”

But Speaker Nancy Pelosi told reporters in a conference call Thursday that Republican claims of a depleted small-business loan program were overstated. “Right now they haven’t even spent a third of it,” the California Democrat said. “So we have time to negotiate.”

As part of a $2.3 trillion financial rescue package enacted last month, Congress provided $349 billion in loans for a new “Paycheck Protection Program” to encourage small businesses to keep workers on their payrolls. The loans could be forgiven if most workers were retained.

The Trump administration requested an additional $251 billion this week, citing surging demand for loans. While generally supportive of that request, Democrats want about $125 billion of that total set aside to help smaller-sized businesses, Pelosi said.

While McConnell sought to use a pro forma Senate session to deliver a quick infusion of cash into a popular loan program, Pelosi dismissed what she called a “stunt performed by the Senate leader knowing it would fail.”

House Minority Leader Kevin McCarthy, in turn, blamed Democrats for the impasse. “I do not think people should play politics with a pandemic,” the California Republican told reporters in a separate call. “People need to work together.”

Despite the setback, both sides said they were hopeful that a deal could be reached relatively soon.

“We’ll have to continue discussions,” McConnell told reporters after the floor session. “No one is necessarily against additional assistance.”

Pressure building

Both sides have felt growing pressure to augment relief efforts as the economic crisis deepened. About 16.8 million Americans filed unemployment claims in just the last three weeks.

“We’re willing to sit down and use a fair process,” Cardin, D-Md., said Thursday. When confronted with McConnell’s unanimous consent request, he said, “We didn’t have that opportunity.”

He said that the Small Business Administration had committed 30 percent of the existing funds but hadn’t yet released them. “The UC leaves out where small businesses need help today. ”

Sen. Chris Van Hollen, D-Md., said Democrats support additional funding for the new SBA loan program, but he argued changes are needed to address various concerns raised since the program began taking applications last Friday.

He cited concerns raised by the National Restaurant Association in a letter Thursday, for instance, that certain changes to the program are just as important as additional funds. For example, restaurants want to relax a requirement that 75 percent of loan funds be spent on payroll in order to qualify for debt forgiveness, so they can meet fixed costs like lease or mortgage payments.

The Democratic alternative Van Hollen offered would help with such expenses by increasing the maximum loan to 300 percent of monthly payroll from 250 percent in the initial aid package. The forgiveness standard wouldn’t be directly relaxed, but small firms would still get access to additional funds.

And Cardin said two other pots of money approved in previous aid packages also were woefully underfunded.

The Democrats’ amendment would bolster an SBA disaster loan account that’s been able to process about $7 billion in coronavirus-related loans, but has seen over $370 billion worth of applications, according to Cardin. And $15 billion would be added to a fund that lets small businesses get up to $10,000 cash advances on their disaster loans, after demand had already exceeded the initial $10 billion appropriated for that program.

Democrats also want to set aside $60 billion of the total SBA funds for lending to underserved rural and minority-owned small businesses, while making it easier for farmers and nonprofits to access the aid.

“Let’s take the opportunity to make some bipartisan fixes to allow this program to work better for the very people it’s designed to help — small businesses, nonprofits. That’s what they are asking us to do,” Van Hollen said.  

Breathing room?

Pelosi said Wednesday that the stand-alone $251 billion measure wouldn’t pass in her chamber, adding that the SBA had enough money to wait a few days while Congress negotiated an interim spending package.

Democrats want to add an additional $100 billion for hospitals and other health care providers and $150 billion for states — doubling amounts provided just weeks ago in the massive $2.3 trillion aid package. They also want to bolster food stamp benefits for low-income households and remove restrictions on election security grants so states don’t have to put up matching funds.

Republicans argued the other programs are just starting to see money roll out of the huge aid package enacted last month, and that the SBA is the only agency that needs an immediate cash infusion. McConnell said President Donald Trump wouldn’t sign the Democratic bill, which a senior administration official confirmed.

“We need more money for small businesses, and the president has been very clear. He’s happy to talk about other issues, such as hospitals and states, in the next bill. But, we wanted to go and get money for the small business program,” Treasury Secretary Steven Mnuchin said on CNBC Thursday.

The Paycheck Protection Program relies on an existing SBA guarantee program to give small businesses forgivable loans to cover up to eight weeks of payroll and other fixed costs. If the companies mostly use the money to pay their workers during the pandemic’s economic shutdown, then they won’t have to pay it back.

By essentially paying small companies to keep their workers, the hope is to soften the number of layoffs caused by the economic shutdown. Thursday’s report of 6.6 million initial claims for unemployment last week means over 17 million workers have lost their jobs in the last month, exceeding the number of jobs lost during the 2008-09 recession.

Despite a rocky rollout that saw the SBA’s online loan portal crash and lenders complain over a lack of regulatory guidance, the program has been exceedingly popular. Senate Small Business Chairman Marco Rubio, R-Fla., tweeted Thursday that over $100 billion in loans to 400,000 small businesses had been approved since it began April 3.

“CONGRESS MUST APPROVE MORE [money] FOR PPP THIS WEEK,” Rubio also tweeted. “Don’t have time to horse trade. Improvements mean we could hit funding limit in days!”

The rapid depletion of the fund has many small-business owners worried that there won’t be any money left by the time they submit an application. Many lenders are only accepting applications from existing customers because the final interim rules issued by the SBA and the Treasury Department kept relatively lengthy anti-money-laundering paperwork requirements in place for new borrowers. Although Mnuchin told CNBC Wednesday that 3,500 lenders are now participating in the program, that still leaves out most of the nation’s banks and credit unions.

On Thursday morning, the Federal Reserve Board also announced it would offer $600 billion in loans to small and mid-size businesses through a lending facility funded by Congress’ third coronavirus relief package. 

Jennifer Shutt, Chris Cioffi and Lindsey McPherson contributed to this report.