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After passing legislation to amend a forgivable loan program for coronavirus-stricken small businesses on Wednesday, the Senate was working on a related bill yesterday that would give borrowers another tax break on their loans, Roll Call reported. Sen. John Cornyn (R-Texas) who introduced the bill in early May, told reporters that leadership was trying to pass the bipartisan measure, but said that it still faced obstacles. The bill would give borrowers a second tax benefit, a practice sometimes described as double-dipping. The borrowers already don't have to treat forgiven loans as income and the bill would allow them to get a business expense deduction. “If I’m not mistaken, we did hotline it — got a couple of holds and we’re working through those one at a time,” he said yesterday. (Senate hotlining involves leadership quickly polling members to see if any have issues with passing it by unanimous consent. It’s a way to pass uncontroversial measures without hours of floor debate.) But Senate Majority Leader Mitch McConnell (R-Ky.) wrapped up later in the afternoon, deferring any action until at least next week. Senate backers of the bill may also be facing resistance from the administration. Treasury Secretary Steven Mnuchin has resisted calls to allow the deduction by changing the rules of the PPP program, calling it a "double dip."

The Senate yesterday passed legislation to ease restrictions on emergency small business loans intended to avert mass layoffs during the pandemic, sending the first major overhaul of the program to President Donald Trump for his signature, Politico reported. The bill, passed by unanimous consent, would relax rules under the $670 billion Paycheck Protection Program to give borrowers more time to spend the money and use it on a broader set of expenses while still qualifying to have the loans forgiven — a key feature offered in exchange for employers maintaining payrolls. The House last week passed the bill in a 417-1 vote. But passing the bill in the Senate proved to be a challenge for Majority Leader Mitch McConnell and Minority Leader Chuck Schumer. Republicans including Sen. Ron Johnson (R-Wis.) resisted at first, with Johnson on Wednesday blocking an initial attempt by Schumer to pass the bill unanimously and demanding assurances about the legislation's intent. He dropped his objections later in the day, allowing the Senate to quickly pass the bill and send it to Trump.

President Trump is planning to meet with his senior advisers as soon as this week to discuss policy options for the next coronavirus relief package as the administration prepares for negotiations with Capitol Hill, according to a senior administration official, the Wall Street Journal reported. The president’s team has assembled a set of proposals meant to encourage the public to return to work and resume normal life, including going out to restaurants and taking vacations, in an effort to jump-start the ailing economy as quickly as possible. “We’ve been through the rescue phase and we’re now in the transitional reopening phase and I think generally speaking we’d like to move into a growth- incentive phase for the future economy,” the senior administration official said. The timing of the meeting, which is planned for this week, could change, officials cautioned, noting that the White House is increasingly focused on the unrest around the country over racial inequality and police brutality. Trump and his Republican allies are headed for another clash with Democrats, who have a sharply divergent view of what should be included in the next package. House Democrats, with the support of one GOP lawmaker, passed a sprawling $3.5 trillion bill last month that Trump dismissed as dead on arrival. Read more. (Subscription required.) 

In related news, Senate Majority Leader Mitch McConnell (R-Ky.) said that his chamber would “soon” vote on a House bill passed last week that would add flexibility to a loan program helping small businesses survive the economic crisis caused by the novel coronavirus, Roll Call reported. “I hope and anticipate the Senate will soon take up and pass legislation that just passed the House by an overwhelming vote of 417-1 to further strengthen the Paycheck Protection Program so it continues working for small businesses that need our help,” McConnell said on Monday. The House passed a bill last week that would make a few tweaks to the Small Business Administration’s Paycheck Protection Program, which offers companies forgivable loans that act like grants so long as the money is used mostly to pay employees. The legislation would give small businesses more time to use the PPP funds and allow them to use more money for nonpayroll expenses. Read more. 

Two congressional hearings today will examine the economic fallout from the Covid-19 pandemic. The Senate Small Business Committee will hold a hearing at 10 a.m. titled "Perspectives from Main Street: Covid-19’s Impact on Small Business." Click here for the witness list, prepared statements and a link to the hearing webcast. At 1 p.m., the House Budget Committee will hold a hearing titled "Addressing the Economic Impacts of Covid-19: Views from Two Former CBO Directors." Click here for the witness list, prepared statements and a link to the hearing webcast. 

A technical snafu in a U.S. government system caused many small businesses to receive loans twice or more under a federal aid program to help businesses hurt by the Covid-19 pandemic, nearly a dozen people with knowledge of the matter said, Reuters reported. The money mistakenly handed out could amount to hundreds of millions of dollars that the government and lenders — which made the loans — have been trying to identify and recover in recent weeks, one of the people briefed on the matter said. The technical issue and scale of the resulting duplicate deposits made under the Small Business Administration’s $660 billion Paycheck Protection Program (PPP) have not been previously reported. They are the latest issue to emerge with the massive program, which was designed to keep businesses hurt by the novel coronavirus afloat and their workers employed. The error was caused by a blind spot in the SBA’s loan processing system which failed to see when some borrowers submitted applications multiple times typically with several different lenders, three of the sources said. Information provided by the sources, which include industry executives and borrowers, as well as Reddit posts, suggest at least 1,020 duplicate deposits were issued. While that is a tiny fraction of funds disbursed under the huge program, it could amount to roughly $116 million dollars based on average loan sizes.

A new study predicted that nearly two-thirds of publicly traded restaurants are at risk of bankruptcy as the Covid-19 pandemic batters the industry, Bloomberg News reported. The concern is higher for small companies and restaurants that specialize in dine-in, consulting firm Aaron Allen & Associates said in an analysis. It identified Bloomin’ Brands Inc., Potbelly Corp. and Chili’s owner Brinker International Inc. among those at greater risk. “It’s really the full-service model that’s in the biggest danger,” principal Aaron Allen said. “Some of those that are in casual dining — a lot of those had already been bleeding cash, bleeding locations.” The study paints a bleak picture for an industry already upended by broad stay-at-home orders that led to sharp declines in restaurant sales. While Americans are starting to venture out again, the dining recovery may be slow with unemployment on the rise, cautious spending and also ongoing concerns about health and safety. That could create an opportunity for a lucky few companies at the top of the food chain, Allen said. Some of the largest firms entered the downturn with the financial wherewithal to survive and perhaps lead an industry consolidation. “The big will eat up the smaller and weaker competition.”

Federal Reserve Chairman Jerome Powell on Friday said that the central bank will open the doors of its emergency lending program for midsize businesses in a matter of days, Politico reported. Under the “Main Street” lending program, the Fed will buy the majority of a bank loan to a company with up to 15,000 employees or up to $5 billion in annual revenue. Powell underscored the difficulty of designing such a program because the companies in that size range are “extraordinarily diverse” and bank loans don’t have the same level of standardization as bonds. Powell also held open the possibility that the program would be further broadened; currently the minimum is $500,000 for new loans, and the maximum is $200 million for expansions of existing loans. “I can imagine us expanding on either end,” he said. “It’s all about creating a context in which employees, a climate in which employees will have the best chance to either keep their job or go back to their job or ultimately find a new job,” Powell said. The Fed chief also said that the central bank plans to hold the four-year loans to maturity but doesn’t intend to deal directly with borrowers in case of missed payments.

The Paycheck Protection Program, the federal government’s ambitious effort to keep workers at small businesses off the unemployment rolls through the worst of the pandemic, has provided a financial safety net to more than four million companies, the New York Times reported. For many, the money was a lifeline. But the Covid-19 pandemic still has many cities shut, consumers’ habits have changed and recharging the economy may take years. Small companies, which employ nearly half of America’s workers who don’t work in government, typically have thin margins and scant savings. Some fear they won’t survive without further help. Even for those who got help, the program’s rollout was messy and chaotic, and Congress is arguing over proposed changes. The program offered small companies a loan that would be converted to a grant if they used most of the money for eight weeks of payroll. The earliest loan recipients are near the end of their eight-week relief period.