One of the most important elements of the $2.2 trillion CARES Act is an initiative called the Paycheck Protection Program. The PPP, as it's now known, makes loans available to small businesses, which become grants if business owners keep their employees on the payroll. In effect, it's a lifeline in which the federal government will indirectly pay these workers' salaries for a while.
There was, however, one key flaw that emerged almost immediately after the economic aid package passed: Congress had allocated $349 billion for the PPP, and that wouldn't be nearly enough. Indeed, the question wasn't whether the program would run out of money, but when.
This morning, that question was answered. CNBC reported that the Small Business Administration announced that the Paycheck Protection Program has officially run out of money.
The SBA website reads that it is "unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time." ... Signs that the program was reaching critical capacity first came on Wednesday, when the SBA said the aid may be nearing a ceiling for loan commitments, with more than 1.3 million loans given approval at a value of more than $296 billion. By Wednesday evening, $315 billion had been approved, a person familiar with the situation told CNBC.
Treasury Secretary Steven Mnuchin formally requested last week that Congress infuse the PPP with an additional $250 billion, and in theory, that shouldn't be much of a problem: the program is very popular and enjoys support from both parties.
But in practice, it's proving to be a surprisingly heavily lift. Democratic leaders are eager to approve the funding request, but they want to include in the bill additional funding for struggling states and municipalities, financially strapped hospitals, and families relying on food stamps. Republicans leaders, meanwhile, want a bill that focuses exclusively on the PPP, pushing off other priorities for a future package.
Democrats have expressed a willingness to negotiate, but for the last two weeks, GOP leaders have said they will not sit down for talks. It's why there's been no progress -- and why the Paycheck Protection Program has run through its $349 billion budget.
By all accounts, this morning's announcement from the Small Business Administration should serve as a clarifying moment for lawmakers, giving the relevant players new motivation to figure something out. In case that weren't enough, learning that 22 million Americans have lost their jobs over the last four weeks should add an additional layer of incentives to reach an agreement.
There are multiple reports that Mnuchin and his team spoke with Democratic leaders last night, and those discussions are scheduled to continue again today. And while that may raise hopes of a deal, Politico reports that Senate Republicans may not cooperate, even if the Trump administration is satisfied with the solution.
Sen. John Kennedy (R-La.) said yesterday that even if Mnuchin and Democrats work something out, "it's still got to pass the Senate.... Just because they agreed to it, it's not a done deal."
Watch this space.