Small business owners who were expecting federally guaranteed, low-interest loans to retain employees, pay bills and stay afloat this week are, for the most part, sitting empty-handed. Meanwhile, the Senate adjourned until Monday without unanimously passing pass a bill to pony up an additional $250 billion for the Paycheck Protection Program loan program.
“Flooded by requests for help like never before, a federal disaster loan program that was supposed to deliver emergency relief to small businesses in just three days has run low on funding and nearly frozen up entirely. Now, business owners who applied are desperate for cash and answers about what aid, if any, they are going to receive,” Stacy Cowley writes for The New York Times.
“The program is supposed to offer loans of up to $2 million, but many recent applicants said the [Small Business Administration] help line had told them that loans would be capped at $15,000 per borrower. That was backed up by a message from the agency that one applicant shared with The New York Times,” Cowley continues.
The CARES Act also authorized the SBA to hand out the first $10,000 within three days as a grant that didn’t have to be paid back. “That hasn’t happened, according to more than 400 applicants who contacted The Times,” Cowley adds.
“The $350 billion Paycheck Protection Program opened a week ago with loans to companies with 500 or fewer employees and expands [today] to include independent contractors and self-employed individuals,” writes The Wall Street Journal’s Yuka Hayashi.
“There are very few business owners who have successfully gotten the money,” Amanda Ballantyne, executive director of the Main Street Alliance, a small-business advocacy group, tells Hayashi.
“Ms. Ballantyne and others point to several reasons for the delay. Chief among them is inadequate guidance given to banks from the Small Business Administration related to loan closing, as well as the agency’s technology used to process loans and approve new lenders.”
Meanwhile, “an effort by Senate Republicans to replenish an emergency fund for small businesses hurt by the coronavirus crisis was blocked by Democrats Thursday who called it a ‘political stunt’ that failed to consider other pressing needs, such as more funding for hospitals,” Christal Hayes and Ledyard King write for USA Today.
Senate Majority Leader Mitch McConnell (R-Kentucky) had proposed legislation that would boost the paycheck Protection Program by $250 billion in addition to the $349 billion Congress approved last month as part of the $2.2 trillion pandemic response known as the CARES Act, they report. But Maryland Democratic Sens. Ben Cardin and Chris Van Hollen objected to a voice vote to pass the measure unanimously.
Cardin instead “pushed for provisions including money for Small Business Administration disaster assistance grants so that people who do not already have a banking relationship can receive the aid…. Van Hollen then tried to unanimously pass a Democratic amendment. McConnell blocked it, and the Senate adjourned until Monday after a roughly 30-minute pro forma session,” CNBC’s Jacob Pramuk writes.
“It is unclear if Republicans and Democrats will try to reach agreement on emergency legislation to pass in the coming days. House Speaker Nancy Pelosi has indicated she could try to pass a Democratic bill on Friday -- which Republicans can likely block with most representatives out of Washington,” Pramuk adds.
All this transpired as 6.6 million Americans applied for unemployment benefits last week, according to the Labor Department -- “a staggering number that would have been unthinkable a few months ago. It’s just shy of the record set the week of March 28, when 6.9 million people filed for aid. In the week of March 21, 3.3 million claims were filed,” Heather Long and Andrew Van Dam report for The Washington Post.
“JPMorgan Chase predicts the unemployment rate will hit 20% and the economy will shrink by 40% in the second quarter, which runs from April through June. While such losses are deep and ‘astounding,’ they are unlikely to be long-lasting,” Princeton University economist Alan Blinder tells Long and Van Dam. “There’s hope that a vaccine or other preventive measure will be found relatively soon, which should prevent this downturn from turning into another Great Depression, which lasted over a decade,” they continue.
“It feels like some big, terrible switch got flipped when the coronavirus upended our lives -- so it’s natural to want to simply flip it back. But that is not how the return to normalcy will go,” Sam Baker observes for Axios.
“Even as the number of illnesses and deaths in the U.S. start to fall, and we start to think about leaving the house again, the way forward will likely be slow and uneven. This may feel like it all happened suddenly, but it won't end that way…. The future will come in waves -- waves of recovery, waves of more bad news, and waves of returning to some semblance of normal life,” Baker writes.
Wishing you a semblance of joy over this weekend.