A small-business loan program designed to back workers’ paychecks has exhausted most of its funding, ramping up pressure on congressional Democrats and Republicans aligned with the White House to reach a deal on the next round of economic aid amid the coronavirus crisis, the Wall Street Journal reported. Negotiations between Congress and the White House over replenishing the small-business program resumed Wednesday. The Paycheck Protection Program was on track to exhaust most of its initial allocation of $350 billion by today, with the Small Business Administration saying that it had approved more than 1.5 million loans valued at more than $324 billion as of yesterday and loans were continuing to be processed. The fund needs about $10 billion to cover processing and fees, Senate Small Business Committee Chairman Marco Rubio (R-Fla.) said on Twitter. Both Democrats and Republicans want to add $250 billion to the small-business aid program, but have been sparring for days over whether to add restrictions to the funds. Democrats want to expand access to the loans as well as include more money for hospitals, food assistance and state and local governments. Republicans, meanwhile, said that they want to keep the bill focused on increasing small-business aid and defer other funding debates until the next, broader legislation is crafted. Read more. (Subscription required.)
In related news, franchise companies that collectively provide jobs for hundreds of thousands of workers across the country are locked out of stimulus funding linked to the coronavirus pandemic because of how the Small Business Administration is interpreting the congressional relief package’s rules, the Wall Street Journal reported. The affected businesses include commercial cleaners, home-repair companies, salons and other franchise operations that the SBA says aren’t eligible for Payroll Protection Program loans in Congress’s Cares Act because of the way the franchises are structured or operate. he SBA, which oversees the roughly $350 billion Paycheck Protection Program, has told franchises that to tap the emergency aid they must be listed on a directory it uses to determine loan eligibility in normal times, business owners say. Most of the affected businesses are structured as tiered franchises, which differs from the national franchise system common in the fast-food industry. Under the tiered model, the franchiser typically sells regional rights to franchisees, which then sell local units. Read more. (Subscription required.)
