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The U.S. Senate will begin debate next week on a fifth coronavirus-response bill, Senate Majority Leader Mitch McConnell (R-Ky.) said yesterday, as he forecast tough negotiations with Democrats who are seeking broader aid than Republicans, Reuters reported. McConnell added the legislation, which has not yet been unveiled, will likely be more contentious than the previous four coronavirus aid bills. Those pumped more than $3 trillion into the hobbled economy with a combination of business loans, expanded unemployment benefits for workers and direct payments to families. “I do think we’ll get there and do something that needs to be done” before Congress begins an August recess, the Republican senator predicted. But there are also divisions among Republicans — in the White House and in Congress — over the precise direction of the upcoming bill, including whether there should be another round of direct payments to individuals and families. McConnell has talked about a bill costing no more than $1 trillion, while Democrats in the House of Representatives passed a $3 trillion measure in mid-May that McConnell has so far ignored. McConnell wants to focus on liability protections for business, schools and other entities as they reopen their operations even as coronavirus cases surge in many parts of the U.S., including Kentucky.

More owners are permanently shutting their doors after new lockdown orders, realizing that there may be no end in sight to the crisis, the New York Times reported. It was harrowing enough for small businesses — the bars, dental care practices, small law firms, day care centers and other storefronts that dot the streets and corners of every American town and city — to have to shut down after state officials imposed lockdowns in March to contain the pandemic. But the resurgence of the virus, especially in states such as Texas, Florida and California that had begun to reopen, has introduced a far darker reality for many small businesses: Their temporary closures might become permanent. Nearly 66,000 businesses have folded since March 1, according to data from Yelp, which provides a platform for local businesses to advertise their services and has been tracking announcements of closings posted on its site. From June 15 to June 29, the most recent period for which data is available, businesses were closing permanently at a higher rate than in the previous three months, Yelp found. During the same period, permanent closures increased by 3 percent overall, accounting for roughly 14 percent of total closures since March. Researchers at Harvard believe the rates of business closures are likely to be even higher. They estimated that nearly 110,000 small businesses across the country had decided to shut down permanently between early March and early May, based on data collected in weekly surveys by Alignable, a social media network for small-business owners. Christopher Stanton, an associate professor at Harvard Business School who was one of the researchers, said it was difficult to accurately gauge how many small businesses were closing because, once they shut their doors for good, the owners were hard to reach. He added that it could take up to a year before government officials knew the true toll the pandemic was taking on small businesses. Read more. 

In related news, the House Small Business Committee will hold a hearing tomorrow at 1 p.m. ET titled "Long-Lasting Solutions for a Small Business Recovery." According to the committee, the hearing will explore efforts to stimulate small business growth following the Great Recession, applying those programs to the COVID-19 crisis, and new ideas to help industries that have been disproportionately impacted by COVID-19. Click here for a list of witnesses and a link to access the live webstream tomorrow of the hearing. 

Twisted Root Burger was a Texas success story, expanding from one casual restaurant in 2006 to 24 sites including restaurants, bars, a brewery and a theater. Now, the company is moving fast in another direction — into bankruptcy, the Wall Street Journal reported. The chain shut down in March. Some sites reopened in June only to be shut down again as coronavirus cases surged. “I’m not gonna open that restaurant at half the revenue,” said co-founder Jason Boso. “I’m gonna walk away from those restaurants. I’m not gonna set myself up for failure.” Boso isn’t giving up though. Instead, his decision to put five of the restaurants into bankruptcy is a strategic move to keep control. The 47-year-old entrepreneur is one of the early adopters of a new law that makes it far faster, easier and more advantageous for struggling small-business owners to file for chapter 11. He expects to cut his liabilities by $500,000 and continue to operate the five restaurants that filed for bankruptcy. Bankruptcy lawyers expect a surge in small-business failures in the coming months. The new law, they say, will make many business owners realize that filing for bankruptcy might be a better option than struggling for years to dig out of a financial hole, especially with the outlook so unpredictable. The new rules give small businesses options that make it easier to file for chapter 11, providing them more leverage to renegotiate leases and debts while continuing to operate, often under the same ownership. The Small Business Reorganization Act took effect in February, and in March the coronavirus stimulus law known as the Cares Act temporarily expanded eligibility to businesses with $7.5 million or less in liabilities. Since the first full week the law was in effect, overall bankruptcies are down compared with last year, but there has been a recent bounce in small businesses filing under the new rules. Total weekly filings during that period have fallen 32 percent from 2019, according to a report prepared by the American Bankruptcy Institute on weekly filing statistics. The reasons are likely federal stimulus and grace periods on rent and other payments, according to ABI Executive Director Amy Quackenboss. “I do think there is going to be a surge,” Quackenboss said. More than 500 companies filed for bankruptcy under the small-business bankruptcy rules since February, according to the American Bankruptcy Institute. June was the top month for filings with 131 cases; many were filed in states hit hard by the pandemic like Florida, Texas, California, New York and Illinois.

Treasury Secretary Steven Mnuchin said yesterday that the Trump administration is unwilling to extend a boost to unemployment benefits amid the coronavirus pandemic if it allows jobless workers to make more money than they did before losing their jobs, The Hill reported. Mnuchin said that any extension of enhanced unemployment insurance would cap benefits at “no more than 100 percent” of what the recipient made before becoming unemployed. The $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act signed by President Trump in March added $600 to unemployment insurance in every state. The boost, which expires on July 31, was intended to help workers in industries derailed by the pandemic support themselves and continue spending money amid the lockdowns imposed to slow the pandemic. The future of the increased benefit is one of the most contentious issues facing lawmakers as they craft another stimulus package. Economists credit the enhanced unemployment benefits, among other stimulus efforts, with preventing a deeper plunge in economic activity. But many Republicans have expressed regrets about the boost because it pushed unemployment benefits above the average wage in many states.

Bed Bath & Beyond said on Wednesday that its sales tumbled nearly 50 percent during its latest quarter, even as online sales surged more than 100 percent during April and May, with consumers stocking up on cleaning supplies and home decor, CNBC.com.  The company said that it plans to permanently close roughly 200 of its namesake stores over the next two years, starting later in 2020, as it works toward getting back to profitability against the backdrop of the coronavirus pandemic. As of May 30, it operated a total of 1,478 stores, including 955 Bed Bath & Beyond shops. Bed Bath — which also owns the chains Buybuy Baby, Christmas Tree Shops and Harmon Face Values — said these actions should generate annual cost savings of between $250 million and $350 million, excluding related one-time costs. Sales fell 49% to $1.31 billion from $2.57 billion a year ago, as the retailer’s stores were temporarily forced shut for much of the quarter like many other companies, to try to help curb the spread of COVID-19. 

New Mexico will offer small businesses up to $400 million in low-interest loans to help them withstand economic turmoil linked to the coronavirus pandemic under a bill signed on Tuesday by Gov. Michelle Lujan Grisham (D), the Associated Press reported. The legislation also makes a smaller pool of loans available to local governments. Eligible small businesses can borrow up to $75,000 that comes from the state’s severance tax permanent fund, a $5 billion trust sustained by taxes on oil extraction and other mineral development. To qualify for the zero-collateral loans, businesses must have annual revenues of less than $5 million and show a 30 percent decline in income during April and May, compared with the same period a year ago.

Michigan’s economic development board on Tuesday authorized a $115 million grant program for small businesses, nonprofits, farms and agricultural processors hurt by the coronavirus pandemic, the Associated Press reported. Entities can start applying July 15. The state will disburse the federal funding — a portion of $880 million in rescue aid signed last week by Gov. Gretchen Whitmer (D) — to 15 local economic development organizations, which will in turn give it to eligible businesses and nonprofits by Sept. 30. To qualify for $100 million for small businesses and nonprofits, an applicant must have no more than 50 employees and not have received grants through a $20 million relief program created in March. The maximum grant is $20,000 and can be used for payroll, rent, mortgage payments, utility expenses and other costs. At least 30 percent of the funds must go to businesses owned by women, minorities or veterans. There also is $10 million for agricultural processors and $5 million for farms, which will cover maximum $1,000 grants per employee for COVID-19 costs such as testing, personal protection equipment and housing needs. To qualify, the businesses must have at least 10 employees. The agriculture-specific funding is first come, first served. The other funding is not.

Senate Majority Leader Mitch McConnell (R-Ky.) appeared to open the door yesterday to including some direct payments to Americans in a future coronavirus relief bill, The Hill reported. Asked if funding for individuals like the stimulus checks included in a March package would be in the next piece of legislation, which would be the fifth in response to COVID-19, McConnell said they "could well" be. "I think the people that have been hit the hardest are people who make about $40,000 or less. Many of them work in the hospitality industry. .... That could well be a part of it," McConnell said. Congress included a $1,200 one-time payment for individuals making up to $75,000 per year in the $2.2 trillion March coronavirus stimulus package. The amount a person could receive then decreased until it hit a salary ceiling of $99,000 per year, where the direct payment was phased out altogether. The Trump administration has pushed for a second round of the direct payments to be included in the next coronavirus relief package taken up by Congress. House Democrats passed a nearly $3 trillion bill in May that included a $1,200 check for individuals, similar to the March bill, but that legislation is not expected to be taken up by the GOP-controlled Senate. President Trump said late last month that he supports another round of stimulus checks. But GOP lawmakers have been wary, believing that the payments don't directly stimulate the economy and went to individuals who have not been impacted financially by the spread of the coronavirus. Read more. 

In related news, direct cash payments can improve financial security, boost consumer spending and may speed up the recovery, according to a letter from a group of economists calling on U.S. policymakers to keep providing direct cash payments to Americans until the economy is stronger, Reuters reported. The stimulus payments should be issued automatically, based on certain economic indicators such as the unemployment rate, until there is enough evidence that the economy is recovering, the group of mostly left-leaning economists said in an open letter organized by the Economic Security Project and The Justice Collaborative. “The first round of economic impact payments were a lifeline that helped some get by for a few weeks,” the economists wrote. “Even after businesses start to re-open and jobs begin to come back, there will be significant economic fallout, and demand will continue to lag if people don’t have money to spend.” The stimulus payments issued in April under the $2.3 trillion CARES Act helped lift spending for lower income households faster than higher income households, with much of the cash going to essentials, according to an analysis by Harvard University’s Opportunity Insights. The $600 supplement Congress added to weekly unemployment benefits are set to expire at the end of the month, leaving jobless Americans at risk of facing a cash cliff while jobs are still scarce. Read more.