On Thursday, April 9, the U.S. Senate failed to pass a proposed $250 billion of additional funding for the Payroll Protection Program (PPP), which is designed to help small businesses. With most senators out of Washington, D.C, the only sessions held are so-called proforma meetings, where no business is conducted but they meet the legal test of being in session.

As these usually see a handful of senators on the floor able to vote but unable to meet the usual requirement that a quorum of 51 senators be present, the only way an item can pass is through the Unanimous Consent (UC) process. With reports that the initial $350 billion in the PPP was close to being oversubscribed Republican Leader Mitch McConnell, with the support of Treasury Secretary Steven Mnuchin and the White House, wanted to increase the PPP funding by $250 billion.

However, Democrats want to have more funding for hospital and state and local government included in the UC agreement, something the Republicans didn’t accept. Democrats weren’t willing to accept the PPP increase as a standalone measure. Since each party objected to the other’s proposal, Unanimous Consent could not be reached on any proposal.

Additionally, if the McConnell proposal had been able to pass under the UC procedure it would have then had to go to the Democratic House of Representatives where Speaker Nancy Pelosi had already declared that a standalone PPP funding increase would not get a unanimous agreement.

What’s next.

Both the House and Senate will have proforma sessions next week so there will be another opportunity to get more money into the CARES Act programs and talks will continue over the weekend, but at this point there is no clear pathway to more funding. However, if the PPP program does indeed become oversubscribed it is hard to see how Democrats can continue to block funding.

The PPP is the small business relief program in the recently signed CARES Act and is designed to give loans to businesses with under 500 employees.

The basic requirement is that 75% of the money goes to paying employees rather than laying them off. If the other 25% goes to operating expenses such as rent and utilities the loan can be forgiven. Community banks have been very successful in getting applications into the Small Business Administration and the larger banks appear to be resolving their issues posed by last minute changes in the SBA rules. The President has singled out Bank of America for their strong performance in the early stages of the program.

Bottom line: $250 billion of more relief hangs in the balance.

Figure: Top Trump Tweets

Raising PPP Funding $250Bln Hits Congressional Obstacle
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