Top U.S. economic policymakers opened the door yesterday to further aid for small businesses hit by the coronavirus-triggered recession, but differed over how broad it might extend and the manner in which it should be delivered, Reuters reported. In testimony before the House of Representatives Financial Services Committee, Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell were pressed by lawmakers concerned the multi-trillion-dollar effort to battle the economic fallout from the pandemic had left a broad swathe of businesses vulnerable, from the smallest corner restaurants to commercial office properties and hotels. Mnuchin and Powell said that they were looking for ways to extend more help, but also that they were hitting legal and practical limits that might require action by Congress to avoid. Fed loans backed by commercial buildings as collateral, for example, were often prohibited by existing lending agreements that forbid the owners from further borrowing, Powell said. And proposals that the U.S. central bank loosen requirements for its Main Street Lending Program to make it more accessible to smaller firms, he said, overlooked the fact that larger businesses have been the ones interested in central bank credit. “There is very little demand below a million dollars,” Powell said in response to Mnuchin’s suggestion that the minimum loan size under the facility could be lowered from $250,000 to $100,000. Help for small businesses, Powell said, would better come through another grant-type program like the Paycheck Protection Program because “trying to underwrite the credit of hundreds of thousands of small businesses would be very difficult,” for the Fed.
