Republicans go on attack as loans for small businesses start to run out

Republicans are stepping up their attacks on Democrats for holding up $250 billion in new funding for a popular small-business lending program that has only $25 billion left in its account and is projected to run out of money on Thursday, possibly leaving many employers in a tough spot.

Senate Majority Leader Mitch McConnell (R-Ky.) and House Minority Leader Kevin McCarthy (R-Calif.) blasted Democrats for demanding concessions in order to refund the program, arguing that it was a bipartisan component of the $2.2 trillion CARES Act and shouldn’t be held hostage for other Democratic priorities. 

The GOP leaders warned that the Small Business Administration (SBA) will have to stop accepting applications for the Paycheck Protection Program (PPP), which provides forgivable loans to employers who keep workers on payroll, once the money runs out.

“Democrats have spent days blocking emergency funding for Americans’ paychecks and now the bipartisan program has run dry. This did not have to happen,” McConnell and McCarthy said in a joint statement. “It has been stunning to watch our Democratic colleagues treat emergency funding for Americans’ paychecks like a Republican priority which they need to be goaded into supporting.”

“Funding a bipartisan program should not be a partisan issue,” they continued. “The notion that crucial help for working people is not appealing enough to Democrats without other additions sends a strange message about their priorities.” 

McConnell last week requested unanimous consent on the Senate floor to pass a clean $250 billion funding increase for the small-business program but Democrats objected.

Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles Schumer (D-N.Y.) say a portion of the PPP money should be reserved for businesses in underserved communities that don’t have strong pre-existing relationships with banks, especially women- and minority-owned businesses.

They want to pair the $250 billion for the SBA with $100 billion in new funding for hospitals and $150 billion for state and local governments. They are also pushing for a 15 percent funding increase for the Supplemental Nutrition Assistance Program (SNAP) to help low-income families. 

House Republican Whip Steve Scalise (La.) joined in on the criticism, calling on Pelosi and Schumer “to stop holding small businesses and workers across America hostage to their endless spending demands.”

“The solution is simple: a clean, standalone funding bill for the PPP. No games, no gimmicks. Democrats must rise to the moment and join Republicans to deliver the critical emergency relief that our small business owners and workers need and deserve,” he said.

President Trump on Wednesday highlighted Democratic opposition to a clean funding increase for the PPP as an example of partisanship thriving in Washington despite the coronavirus crisis.

“It’s been so good that it’s almost depleted and we want to replenish it and we can’t get the Democrats to approve it,” he told reporters in the Rose Garden. “And that’s a program that they and everybody else admit … [is] great.”

Republicans could try to use the impasse as ammo against Democratic candidates in the fall campaigns. 

National Republican Senatorial Committee communications director Jesse Hunt on Wednesday said: “Senate Democrats played a game of chicken with essential small business relief and now small business owners and their employees will suffer because of their inaction.”

Vulnerable candidates in both parties are eager to see a deal. 

“I completely agree that we got to get more funding for small businesses … especially if that money goes out to the employees of those small businesses,” Sen. Doug Jones (D-Ala.) told reporters Tuesday. 

“I think everybody wants to see that and we understand that that money is going to be running out,” he continued. “From my standpoint, I’ve always believed that we’re going to need to put more money. The big question is: how do you do it and where do you go?”

Jones said “it’s also important that we get more money especially in two other areas: one is health care.”

“We have to get more money to state and local [governments], particularly our cities and counties, who are also under stay-at-home orders,” he said. “They have been still providing police, fire, sanitation, all those essential services.” 

Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza announced Wednesday evening that the PPP would soon no longer be able to accept loan applications.

“By law, the SBA will not be able to issue new loan approvals once the programs experience a lapse in appropriations,” they said in a joint statement. “We urge Congress to appropriate additional funds for the Paycheck Protection Program — a critical and overwhelmingly bipartisan program — at which point we will once again be able to process loan applications, issue loan numbers, and protect millions more paychecks.”

The SBA reported that, as of 9 p.m. Wednesday, there had been more than 1.5 million applications approved totaling $324 billion, leaving only $25 billion left in its account.

Congress appropriated $349 billion for the program last month.

Mnuchin and Schumer spoke earlier Wednesday in an attempt to reach a deal that would fund the small-business program and also meet two key Democratic priorities: $100 billion for hospitals and $150 billion for state and local governments.

Democrats also want to set aside a portion of small-business loans for women-, minority- and veteran-owned businesses in underserved urban, rural and tribal areas.

A senior Democratic aide said Schumer’s and Pelosi’s staff spoke with Mnuchin and Treasury Department staff on Wednesday, and they agreed to continue talks Thursday.