Get all the latest news on coronavirus and more delivered daily to your inbox. Sign up here.
President Trump on Friday signed the $484 billion coronavirus relief package that will boost the tapped-out small-business loan program, the latest effort by the federal government to dull the economic pain triggered by the coronavirus pandemic.
The package includes $310 billion for the Paycheck Protection Program, established in the previous relief bill to help small businesses maintain workers on their payroll during the virus outbreak.
There is also $75 billion for hospitals, with a special focus on those in rural areas, $25 billion to expand testing for COVID-19 and $60 billion in loans and grants for a separate Economic Injury Disaster Loan program. The measure passed Congress almost unanimously on Thursday as House lawmakers voted in Washington for the first time in almost one month.
It will add to the already unprecedented levels of federal spending. Last month, Congress passed the $2.2 trillion CARES Act, which first created the $349 billion Paycheck Protection Program.
But money for the program ran dry within two weeks, prompting anger from the business community.
The aid can be used for payroll and other expenses, like insurance premiums, mortgages, rent or utilities through June 30. As long as 75 percent of the money goes toward keeping workers employed and maintaining salary levels, the loans, which are guaranteed by the federal government, will be fully forgiven.
In their haste to get life support to small businesses, Congress did not exclude publicly traded companies or limit market value in the economic-relief plan that passed last month. Regardless of how much cash a company had in the bank, if the business could show any loss as a result of the virus outbreak, it qualified for a small-business loan through the PPP, according to an SBA source.
That opened the program to a slew of big firms that could have received help via different avenues, like the Federal Reserve.
At least 75 publicly traded companies -- some with market values well over $100 million -- tapped the government-backed Paycheck Protection Program, receiving a combined $300 million in low-interest loans, according to a recent Associated Press analysis.
The loans were among the 4,412 approved by banks and the Small Business Administration worth $5 million or more, according to SBA data. The total amount of loans approved for at least $5 million totaled $30.9 billion — or about 9 percent of all those approved. The size of the typical loan nationally was $206,000, according to the data.
The backlash against the program began this week, after national restaurant chains that employed thousands of workers before the crisis secured millions of dollars in small-business loans. Among the companies were Potbelly Corp., the nationwide sandwich shop chain, Ruth's Hospitality Group, which operates a series of steakhouses, and Shake Shack. Shake Shack and Ruth's both announced this week they would cancel their loans.
Congress isn’t scheduled to return to Washington until May 4