Congress May Up PPP Funding
Today there’s been a major development that could lead to Congress increasing funding for the Payroll Protection Program that was part of the CARES Act. With reports of huge demand there is growing concern that lenders will blow through the $350 billion in funding and Senate Republican Leader Mitch McConnell suggested that Congress act quickly to increase the appropriations.
The U.S. Treasury Dept. responded by recommending $250 billion in additional funds, and McConnell suggested that the Senate could pass more money as early as Thursday using the Unanimous Consent (UC) or voice vote procedure. Both require that there be no objection as the House and Senate are only meeting in so-called proforma session with only a handful of members in town. If anyone would want to stop the bill by asking for a quorum, or 50% of the members present, the bill would die for lack of a quorum. Since the original bill passed the Senate on a vote of 96 to 0 McConnell is confident he can pull off the trick in the Senate.
Speaker of the House Nancy Pelosi has the same parliamentary problem that McConnell has as her members are also out of town. As we saw when the CARES Act passed in the House of Representative, one member can stop the process by demanding that a quorum be present. With the negative push back Congressman Thomas Massi received over his objection to the CARES Act two weeks ago, I believe the House, like the Senate, could pass increased funding for PPP without 218 members needing to return to DC.
Speaker Pelosi has some questions as to whether or not Congress should pass a funding bill only, and not review other potential changes in the program, but I suspect she will relent in the next few days.
The Payroll Protection Program (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 could pass in the next week.
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