COVID-19 & SMALL BUSINESS UPDATE
- President Donald Trump today signed the half-trillion-dollar interim stimulus bill that includes a boost for the federal small business relief program and hospitals fighting the coronavirus. The measure puts the total figure of stimulus spending since the crisis started to almost $3 trillion, and the Congressional Budget Office in a new study released today says the nation’s deficit could surpass $3.7 trillion this year.
- This comes after the House of Representatives overwhelmingly passed a $484 billion coronavirus relief bill to replenish a tapped-out small business loan program, bolster funding for hospitals and expand coronavirus testing.
- Earlier this week it was reported that Speaker Nancy Pelosi and Democrats in the house were drafting a temporary overhaul of the chamber’s rules that would permit lawmakers to cast votes by proxy for their colleagues, allowing them to go on record without leaving home during the coronavirus outbreak. The temporary overhaul of the rules was met with heavy resistance and opposition by Republican. "I think you'll see pretty close to universal Republican opposition," said Rep. Tom Cole, the top Republican on the House Rules panel, who has called on lawmakers to return to Washington. The rule change was expected to come to the floor today, until Speaker Pelosi announced on Wednesday that she was scrapping the plan. It is reported that Speaker Pelosi came to her decision after speaking with House Minority Leader Kevin McCarthy (R-Calif.) for over an hour. The House instead adopted a resolution to create a special congressional subcommittee that oversees the distribution of coronavirus relief funds vote. House Speaker Nancy Pelosi announced that Majority Whip Jim Clyburn will chair the committee.
- $484 billion coronavirus relief bill negotiated by congressional leaders and the administration would increase spending by about $483 billion according to the Congressional Budget Office, including:
- $321.3 billion in additional appropriations to support the Paycheck Protection Program, which the bill would modify to set some funds aside to support loans issued by smaller lenders.
- $60 billion for separate disaster loans to small businesses.
- $75 billion for hospitals.
- $25 billion for virus testing.
- The measure omits additional funding sought by Democrats to support states and cities, and it wouldn’t change the eligibility rules for businesses to receive loans under the Paycheck Protection Program.
- The legislation would be designated as an emergency requirement for budgetary purposes. Though the measure is the fourth major package to respond to the coronavirus pandemic, congressional leaders and the administration have described it as an interim step as they negotiate the next package, generally referred to as “phase four.”
- A full report of the $484 billion coronavirus relief bill can be found be found here.
- The Phase 4 relief package that has the potential for $1 Trillion dollar price tag is not expected soon. Leaders of both parties have acknowledged that more aid is needed to address the overwhelming economic fallout that’s occurred during the pandemic, but McConnell appears increasingly reluctant to approve additional relief at the current scale. He also suggested that bankruptcy for some states might be preferable to bailouts — a process almost all states currently cannot use. Democratic lawmakers tried but failed to get $150 billion for state and local governments included in the relief package that was just passed by the House and the Senate.
- McConnell and other Republicans, including House Minority Leader Kevin McCarthy, meanwhile, have been stressing that continuing to approve relief packages at this rate could be detrimental to the national debt. They’ve argued that the best response to the economic downturn may not be ramping up the degree of relief, but to reopen parts of the economy strategically.
- The Phase 4 bill is not expected to be passed until late May or early June and it is no longer clear to us that a fifth or sixth relief bill will also pass this year.
- What's In Trump's 3-Phase Reopening Plan President Donald Trump's new guidelines for reopening parts of the country recommend states and localities confirm a two-week downward trend in coronavirus symptoms and documented cases before starting to ease lockdowns while assuring hospitals have adequate capacity and robust testing in place. The administration envisions states or localities meeting those criteria each time they progress through three phases. It's not prescribing target dates for meeting each phase, and officials acknowledged restrictions could snap back if there's a resurgence in cases. Here's how the new guidelines envision easing social distancing restrictions:
- Phase one: Restaurants, movie theaters, sporting venues, places of worship and gyms can reopen if they observe strict social distancing. Elective surgeries can resume when appropriate on an outpatient basis. Schools currently closed should remain shut and visits to senior living facilities and hospitals should be prohibited. Bars should remain closed. High-risk individuals should remain at home.
- Phase two: Schools and organized youth activities like camps can reopen. Nonessential travel can resume, and people can start circulating in parks, outdoor recreational areas and shopping centers, while avoiding gatherings of more than 50 individuals unless unspecified precautionary measures are taken. Restaurants, movie theaters and other large venues can operate under moderate social distancing rules. Vulnerable individuals should continue to shelter in place, and employers should continue to encourage telework whenever possible. Common areas where people congregate in close quarters should be closed. Bars can operate with diminished standing-room occupancy.
- Phase three: Vulnerable individuals can resume public interactions but practice social distancing. Employers can resume unrestricted staffing of workplaces. Large public venues can operate under limited social distancing rules. Visits to senior care facilities and hospitals can resume. The document also outlines "core state preparedness responsibilities," including having adequate testing and screening, the ability to supply enough protective gear and medical equipment and plans to surge intensive care beds, if needed.
- The big picture: It leaves the final say in any loosening of restrictions to state and local officials, adding that governors should work on a regional basis to progress through the phased recovery. The document repeats past federal guidance on personal hygiene — including urging people to wear masks or face coverings when in public. Employers should consider temperature checks, social distancing and doing their own testing and contact tracing. It urges barring anyone with symptoms from returning to work until they are cleared by a medical provider.
- The Small Business Administration issued new guidance on Thursday making it less likely that big publicly traded companies can access the next round of funding for the U.S. government’s small business relief program. It also stepped up pressure on public companies that have tapped funds to return the money. The new Frequently Asked Questions guidance updated on Thursday, Treasury said many of those companies would not be able to certify in their loan applications that funds were “necessary” for continued operations because they were already well-financed.
- Statement from Secretary Steven T. Mnuchin and Administrator Jovita Carranza on the Success of the Paycheck Protection Program WASHINGTON – Today, U.S. Small Business Administration Administrator Jovita Carranza and U.S. Treasury Secretary Steven T. Mnuchin issued the following statement regarding the success of the Paycheck Protection Program (PPP):
- “The Treasury Department and SBA launched the unprecedented Paycheck Protection Program in just one week. Following its launch, the SBA processed more than 14 years’ worth of loans in less than 14 days, which will protect a vast number of American jobs. “The PPP enjoyed broad-based participation across the country from lenders of all sizes and a wide array of industries and businesses. From its start on April 3, PPP provided payroll assistance to more than 1.6 million small businesses in all 50 states and territories. Nearly 5,000 lenders participated in this critical program, including significant lending by community banks and credit unions. Nearly 20% of the amount approved was processed by lenders with less than $1 billion in assets, and approximately 60% of the loans were approved by banks with $10 billion of assets or less. No lender accounted for more than 5% of the total dollar amount of the program.“The vast majority of these loans—74% of them—were for under $150,000, demonstrating the accessibility of this program to even the smallest of small businesses.
- Politico reports - Unemployment Claims Continue To Climb: Americans filed 4.4 million jobless claims last week, the Labor Department reported Thursday, pushing the five-week total above 26 million. The new figure suggests the unemployment rate is approaching the 25 percent peak recorded in 1933 during the Great Depression. Heidi Shierholz, senior economist at the left-leaning Economic Policy Institute, estimates unemployment is now at 18.3 percent, and an analysis by POLITICO's Andrew McGill concludes that 16 percent of American workers have sought unemployment benefits since mid-March. "It will take several more weeks before claims drop below one million," says Ian Shepherdson, chief economist at Pantheon Macroeconomics. In five weeks, closures caused by the pandemic have erased the 22 million jobs gained since the Great Recession of 2008-2009.
Some Still Waiting... Most states still haven't begun to process claims for self-employed and other workers made newly eligible for jobless benefits on an emergency basis under the Pandemic Unemployment Assistance program. Indeed, only 10 states have updated their systems to pay out benefits to these workers, the Labor Department said Thursday.
- Bloomberg Government reports - GOP Senators Press On for Aid Over McConnell ‘Pause Button’ Call: Senate Majority Leader Mitch McConnell’s opposition to Democrats’ calls for billions more in aid to cash-strapped cities and states isn’t stopping many of his Republican colleagues from lining up for a piece of the funding they fully expect to be in the next Covid-19 relief package. In a series of recent virtual town halls, tweets, and private meetings, rank-and-file Republicans made clear they are ignoring the calls from the GOP leader from Kentucky to “push the pause button” on the aid. They’re now working closely with officials in their home states to make sure they will be in line to get a fair share of what could be hundreds of billions of dollars in the next recovery package.
- “The skyrocketing unemployment rate and subsequent decline in tax revenue has left local gov’ts stretched to the limit,” Sen. Rob Portman (R-Ohio), a member of the Senate Finance Committee, tweeted on Wednesday. “As I told Ohio’s county commissioners on our call this morning, I’m working [with] my colleagues to secure additional and more flexible funding.”
- McConnell said after the Senate passed a more than $480 billion interim package (H.R. 266) to shore up a small business loan program and boost hospital funding that he’d rather see states declare bankruptcy than give them money to cover lost revenue during the crisis.