With Demand Soaring, Congress Weighs Adding $250 Billion in Small-Business Aid

Less than two weeks after enactment of a $2 trillion stimulus plan, the Trump administration is asking for a fresh infusion of funds to help businesses survive the economic damage of the coronavirus.

Credit…Erin Scott for The New York Times

WASHINGTON — Rushing to shore up a $2 trillion economic stimulus effort that is already under strain, Congress could move as early as this week to approve another $250 billion in aid for small businesses, after the Trump administration asked for additional funds to support an overwhelming demand for help.

The request for a quick infusion of more money, which Republican and Democratic leaders acknowledged was necessary, signaled a recognition among lawmakers and the administration that the historic economic stabilization package enacted only two weeks ago to help businesses survive the economic damage of the coronavirus pandemic did not go nearly far enough.

It came as Congress was already debating the contours of yet another sweeping relief measure to respond to the economic toll of the crisis. But before lawmakers can debate or act on that, they are now weighing urgent action this week to help businesses eager for immediate government help — and the employees who depend on them.

Steven Mnuchin, the Treasury secretary, reached out to top Democrats and Republicans on Tuesday to request the additional funds, which would go to a new program to help small businesses secure loans from banks. The program has had an exceedingly rocky start, but the rush to replenish it reflected the desperation among businesses to take advantage of it.

“I’ll be asking Congress to provide an additional $250 billion for the paycheck protection, which will help keep Americans employed, to facilitate a quick and full recovery,” President Trump said on Tuesday at the White House during a coronavirus task force briefing, referring to the new program intended to get money to small businesses. “We’re doing very well.”

Senator Mitch McConnell, Republican of Kentucky and the majority leader, said in a statement on Tuesday that he hoped to approve the additional funding during a procedural session on Thursday, without the full chamber present.

It was unclear whether Democrats would agree to the speedy timetable. A spokesman for Senator Chuck Schumer, Democrat of New York and the minority leader, said Tuesday afternoon that Mr. McConnell had not yet reached out about arranging for quick action on the new funding.

Speaker Nancy Pelosi suggested she would be open to what she called “an interim package” to provide more funding for the small-business program. But she signaled that Democrats might insist on adding conditions, like ensuring that money is set aside for underserved populations, including veterans, people of color, women and newer businesses.

“We want to make sure the program is administered in a way that does not solidify inequality in how people have access to capital, but instead, benefit to everyone who qualifies,” Ms. Pelosi said in an interview on CNN.

The stimulus law provided $349 billion for the initiative, known as the paycheck protection program. Larry Kudlow, the top White House economic adviser, said Tuesday morning that the program had funded 178,000 loans at a value of $50 billion since it opened applications on Friday.

But the debut has been plagued with problems, with lenders and potential borrowers alike encountering difficulties navigating it. It has stretched the limits of the Small Business Administration, which typically backs $30 billion of small-business loans in a boom year — about the same amount banks are now seeking for their customers in a day. Small-business owners, bankers and other participants have said that very little of the billions disbursed have actually reached companies in need of the money, which are desperate for it.

Under the terms of the program, businesses that maintain their staffing levels and use the bulk of the money to cover payroll costs will not need to repay their loans.

Many economists warned lawmakers — before, during and after the debate on the $2 trillion law — that small businesses would need significantly more help from the government in the face of an outbreak that has brought entire sectors of the economy, including dining and hospitality, to a halt.

Any delay in availability of funds for business owners, or even the perception that there might not be enough money to go around, could cripple companies and potentially throw workers into unemployment. The typical small business cannot survive less than a month without incoming revenue, according to research by the JPMorgan Chase Institute.

“It is quickly becoming clear that Congress will need to provide more funding or this crucial program may run dry,” Mr. McConnell said. “That cannot happen. Nearly 10 million Americans filed for unemployment in just the last two weeks. This is already a record-shattering tragedy, and every day counts.”

With lawmakers scheduled to remain in their districts and home states until at least April 20, approval of such funding would require unanimous agreement between both parties in both chambers.

While Republicans appeared eager to act swiftly on Mr. Mnuchin’s request, Democrats said they could insist on caveats. Senate Democrats called on Mr. Mnuchin and Jovita Carranza, the administrator of the Small Business Administration, to direct a certain amount of funds to businesses that typically have more trouble obtaining loans, including those in rural and underserved areas.

But there was widespread agreement that the program would need at least one more round of funding from Congress. Senator Marco Rubio, Republican of Florida, and other proponents of the program have been working feverishly with the administration to ensure its continued operation. Mr. Rubio noted on Twitter that “we have days, NOT weeks to address this.”

“It is less money than we would end up spending if we go into a deep recession or depression and less money than our social services would end up spending,” said Senator Susan Collins, Republican of Maine and one of the architects of the program, adding that she had been hearing a “deep sense of relief” from business owners and workers.

Economists who pushed for the creation of the program in the stimulus package that passed two weeks ago have consistently warned that small businesses would need three times as much money as Congress initially authorized — or more — to avoid a wave of bankruptcies.

“Demand for the program could easily exceed $1 trillion,” said Michael R. Strain, an economist at the American Enterprise Institute who was an early supporter of direct aid to small firms. “The more money small businesses request for payroll in the form of grants, the less the government has to spend at all levels on unemployment insurance.”

Last month, Congress passed three separate measures to respond to the novel coronavirus and its effect on the economy, and the government has scrambled to carry out the changes to new and existing programs. The administration has also clashed with lawmakers over how to interpret new mandates. And on Tuesday, Mr. Trump moved to effectively oust the leader of a new oversight panel charged with overseeing how the administration spends the more than $2 trillion in taxpayer dollars Congress has approved.

Some of the funding deficits and oversight provisions are also likely to be revisited as lawmakers begin outlining the contours of a fourth aid package to stave off further economic fallout.

Lawmakers in both parties appear to be moving toward agreement that quick action will be needed on such a bill. Democrats have dropped the idea of insisting on including a sweeping infrastructure proposal that could have taken weeks or longer to fashion. Republicans including Mr. McConnell, who had initially voiced skepticism about the immediate need for another package, reversed course on Friday after the release of staggering new unemployment figures.

Senate Democrats unveiled their newest proposal on Tuesday to provide hazard pay to essential workers like health care workers, grocery store employees, truck drivers, drugstore workers and pharmacists, with Mr. Schumer declaring it “one of our very highest priorities” for a fourth relief measure.

The proposal would provide up to $25,000 annually for employees forced to continue working on the front lines during the pandemic, with retroactive pay possible for employees since a public health emergency was declared in late January. It would also provide a $15,000 recruitment incentive for emergency medical workers, health care employees and home care workers in part to help guard against staffing shortages during the pandemic.

Democrats on the House Financial Services Committee have also proposed a number of policy provisions to address housing concerns and assist small businesses and families, according to a memo obtained by The New York Times. They include providing $60 billion to forgive $10,000 in private student loan debt, imposing an eviction ban, establishing a $100 billion rental assistance fund, and suspending work and other requirements for public housing.

Carl Hulse and Alan Rappeport contributed reporting.

Source: With Demand Soaring, Congress Weighs Adding $250 Billion in Small-Business Aid