US Set To Pump More Funds Into Small Business Loans

US Treasury Secretary Steven Mnuchin said Tuesday he is asking Congress to reinforce a new small business loan program that has been overwhelmed with applications.

With shops and restaurants nationwide forced to shut down due to the coronavirus pandemic, the government launched the Paycheck Protection Program (PPP) Friday to provide $350 billion in what are essentially grants as long as businesses use the funds to pay their workers.

Banks have been flooded with requests and warned that the amount would not be sufficient.

Mnuchin said on Twitter that he has reached out to both the Republican and Democratic leaders of the Senate and House of Representatives "to secure an additional $250 billion for the #PPPLoan program to make sure small businesses get the money they need!"

Senate Majority Leader Mitch McConnell said he wants to get lawmakers to approve the infusion on Thursday, but Democratic House Speaker Nancy Pelosi said she wants assurances the funds are being distributed equitably.

The PPP, part of the $2.2 trillion rescue package that Congress approved in late March, was rushed out by the Treasury and the Small Business Administration last week, and got off to a rocky start.

Banks have been frustrated by the lack of clear guidelines on how the program will work and businesses have been left in limbo about when or whether they will receive their money.

Pelosi said on CNN "it was clear even as we passed the last bill, that it would not be enough... but it was a giant first step."

She said Mnuchin called her early Tuesday to ask for additional funds for the PPP because of the high demand, but said she has "certain considerations" about the program.

"We want to make sure that the program is administered in a way that does not solidify inequality, and how people have access to capital, but instead benefits... everyone who qualifies for it," Pelosi said, though she did not specify what changes she would require.

McConnell also said it was clear the program needed more funding and called for rapid action from lawmakers.

"Congress needs to act with speed and total focus to provide more money for this uncontroversial bipartisan program," he said in a statement.

"Jobs are literally being saved as we speak. But it is quickly becoming clear that Congress will need to provide more funding or this crucial program may run dry."

President Donald Trump said Tuesday the PPP has processed over $70 billion in guaranteed loans, he said.

"We'll be running out of money pretty quickly, which is a good thing in this case," Trump said.

The Independent Community Bankers Association (ICBA) on Monday called the launch of the program "flawed" and said the initial amount was "inadequate for the magnitude of need."

But the American Bankers Association praised the decision to increase funding for the program and said despite the early difficulties banks are working to process the loan applications as quickly as possible.

The increased funding "can reassure more small businesses that they will be able to benefit from this financial lifeline."