The federal program backstopping small businesses during the coronavirus crisis is set to run out of funds Wednesday evening, thanks in part to a Senate stalemate over refilling its coffers.
The Paycheck Protection Program (PPP) is expected to grind to a halt after approving loans to over 1.4 million small businesses. That, Small Business Committee chairman Marco Rubio (R., Fla.) wrote Wednesday, will leave 700,000 small business applications in "limbo."
Sadly it appears #PPP will grind to a halt tonight as the limit on $ allocated to guarantee #PPPloans about to be hit.
Now 700000 small business applications are in limbo & no new loans will be made until the game of chicken in Congress ends & additional $ approved.
Inexcusable
— Marco Rubio (@marcorubio) April 15, 2020
Senate Republicans attempted to refuel the PPP last Thursday, pushing for an additional $250 billion on top of the $350 billion initially allocated under the CARES Act. But Democrats blocked their bill before introducing a version of their own, which would have added on another $250 billion for bailouts of hospitals and state and local government.
The ongoing standoff leaves hundreds of thousands of small business owners without the means to pay their employees, which will in turn hasten mass layoffs, driving up unemployment and further taxing the nation's already buckling unemployment insurance systems.
Since last Thursday's standoff, Republicans have called repeatedly for a "clean bill." Democrats, however, saw the rapidly depleting fund as an opportunity to wring further policy concessions out of their Republican colleagues.
"Last week when they asked for $250 billion in 48 hours, I said I don't think so. Let's see how we can open this up to many more people," Speaker of the House Nancy Pelosi (D., Calif.) said during a Tuesday appearance on MSNBC. "Let's negotiate and see how we can come to some conclusion that will benefit all of the needs."
Republicans have signaled an openness to Democrats' proposals, but repeatedly emphasized that hashing out the details will take time and legislative energy that America's small businesses do not have. As Rubio explained during a Wednesday podcast appearance, figuring out how to efficiently allocate state and local funds is a complicated process.
Now, that legislative stalemate leaves many small businesses floundering without a lifeline. One recently released survey found that 4 in 10 have already closed their doors, and up to half of small businesses could close permanently if the crisis drags out for four months.
That, in turn, helps to explain America's skyrocketing unemployment rate, with over 17 million unemployment claims filed in the past three weeks. The PPP works by guaranteeing loans to small businesses which can be forgiven if the loans are spent on payrolls. The same survey found that a PPP-like program should cause small businesses to cut their work forces by just 6 percent, down from 40 percent with no assistance.
Last week's standoff is just the latest instance of Pelosi's coronavirus brinksmanship. She was instrumental in delaying the CARES Act, Congress's $2 trillion bailout package, by more than a week, in the process introducing a 1,400-page alternate bill packed with special handouts. Pelosi has also pushed an end to the cap on the state and local tax deduction as a form of bailout, a change which would overwhelmingly benefit rich residents of deep blue states such as New York and her native California.