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Democrats and the Trump administration are close to a deal for Congress to replenish a tapped-out program to help small businesses stay afloat as the coronavirus forces a broad shutdown of the nation’s economy.
Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi said Sunday the two sides were nearing an agreement that would include funding for the Paycheck Protection Program, a $349 billion fund that was part of the federal government’s stimulus package passed at the end of March, as well as provide money for coronavirus testing and overwhelmed hospitals.
The evaporation of the program's funds came at a critical time: Over the past four weeks, 22 million Americans filed for first-time unemployment benefits, a stunning sign of the massive economic damage inflicted by the virus outbreak. Before the pandemic, the largest number of Americans to seek jobless aid in a four-week period was 2.7 million in the fall of 1982.
“I’m hopeful we can reach an agreement the Senate can pass tomorrow and the House can pass Tuesday,” Mnuchin said Sunday during an interview on CNN. “We’re making a lot of progress.”
Mnuchin said the agreement could include two aspects that Democrats have pressed for: $75 billion for hospitals and $25 billion to expand testing for COVID-19, the respiratory illness caused by the novel coronavirus.
The Paycheck Protection Program was part of the $2.2 trillion economic-relief bill and provides loans at ultra-low interest rates to businesses with fewer than 500 employees to incentivize them to keep staff on payroll or rehire laid-off workers as the virus paralyzes the U.S. economy. If at least 75 percent of the money is used to maintain the size of their payroll, the federal government will forgive the loans.
But money for the program ran dry last Thursday and the Small Business Administration said on its website that the agency is "currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time."
Under current negotiations, lawmakers are considering allocating an additional $310 billion to the PPP and an extra $60 billion to a separate Economic Injury Disaster Loan Program, or EIDL, that provides grants of as much as $10,000 for businesses, according to The Wall Street Journal.
“We have common ground,” Pelosi said on ABC’s “This Week.” “I think we’re very close to an agreement.”
Republicans initially only wanted to allocate additional aid to the small-business fund, while Democrats maintained that it needed to include emergency funding for hospitals, local and state governments and a food stamp program, as well as some changes to the small business aid program.
The $350 billion approved by Congress in late March evaporated in less than two weeks. There were 1,611,397 loans approved that depleted the $349 billion fund. Nearly 5,000 lenders participated, according to SBA data.