Congress just found over $ 100 billion in extra cash in its paycheck protection program and a Republican senator already has an idea of how to spend it: fixing businesses damaged by riots sparked by the murder of George Floyd by Minneapolis Police.
Senator John Kennedy, a Republican from Louisiana, raised the idea Wednesday with Treasury Secretary Steven Mnuchin during a Senate hearing. As of June 6, the program had 4.53 million loans outstanding, worth $ 511.4 billion. But the loan limit is capped at $ 659 billion and authorization to grant new loans expires at the end of this month, making the full amount unlikely to be needed.
“I am going to present a bill that I would like you and your very capable, and I mean sincerely, that my colleagues at the Treasury consider taking some of this money and making it available to businesses, mainly to companies. small businesses, but businesses that have been lost as a result of fires, looting and criminal riots, ”Kennedy said. “I think they’re going to need some help.
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Mnuchin said lawmakers gave the Treasury $ 60 billion more than it asked for when the PPP authority was restored in April.
“We hadn’t planned to use some of this extra money, but we would like to work with you to reuse it,” Mnuchin said.
Kennedy said he planned to include a provision in his bill that would require authorities to seek civil damages against looters to help offset the costs of the aid.
Senator Chris Coons, a Democrat from Delaware, had his own ideas of what to do with the surplus: allow companies that had paid off one P3 loan to be able to take on another.
As of mid-May, PPP loans have stalled at just over $ 500 billion as some companies have paid off their loans, others have paid off the money, and new demands have stopped coming in. As of May 30, there was $ 510.2 billion in arrears against 4.48 million loans and as of May 16, $ 513.3 billion had been loaned.
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The stagnation of PPP loans came as a surprise, given that the initial $ 350 billion tranche was used up in 13 days, prompting Congress to top up the lending authority with an additional $ 310 billion. Although the loan program is an authorization, meaning that there is no real money that will still be available if the authorization is not renewed, the turnaround came as a surprise to lawmakers and d ‘others who were initially concerned that another replenishment might be necessary.
The easing of loan conditions included in a new law signed last week by President Donald Trump could increase the number of loans a bit, but probably only marginally.
Thomas Wade, director of financial services policy at the conservative American Action Forum, said he was “baffled” by the lack of new loans.
He said there were three potential reasons: companies feared potential public relations problems, as has been the case with some publicly traded companies that have taken out and repaid PPP loans; “Fear and uncertainty” about loan terms that might make debt forgiveness less likely and hope that businesses might qualify for the Federal Reserve’s “Main Street” loan programs instead.
While Wade said he believes demand for the program was unlikely to have been exhausted, a recent survey by the National Federation of Independent Businesses indicated that a large majority of its members had already taken out loans. .
The survey, released on June 2, found that 77% of members surveyed had applied for a PPP loan, and of those, 93% had received their money. About a quarter, 24%, of respondents were still in the early stages of their loans, with the program’s initial eight-week lending period ending in July. Under the new law, businesses can now take up to 24 weeks to use the money.
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