A Second Wave of Help is on the Way For Small Businesses
A Scramble in the Senate
Across the country last week, some small businesses impacted by coronavirus felt relief as they received funding from the Federal Government’s Paycheck Protection Program (PPP). Others felt frustration and worry since the funds from the $350 billion program ran dry before many applications could be processed.
Early Tuesday morning, lawmakers came to an agreement about how to provide further aid to struggling small businesses. Treasury Secretary Steven Mnuchin, White House Chief of Staff Mark Meadows, Senate Democratic Leader Chuck Schumer, and Speaker Nancy Pelosi discussed plans for providing a second wave of aid, and eventually struck a deal.
Though Monday’s negotiations were rocky, lawmakers on both sides of the aisle were optimistic about the outcome of Tuesday’s negotiations. Their predictions came true and in a 4 p.m. pro forma session yesterday afternoon, the Senate passed the bill.
Here’s What’s Included
The new package will encompass $484 billion in total funds. It will provide an additional $310 billion for the Paycheck Protection Program. $60 billion will be devoted to small lenders. $50 billion will go to the Economic Injury Disaster Loan Program. $25 billion will be put towards COVID-19 testing, and an additional $75 billion will go to hospitals.
Both Democrats and Republicans agreed on the need to provide more PPP funding, but disagreed about what else should be included in the initiative. At first, Republicans only wanted to fund small businesses. Democrats pushed to add more funds for food stamps, support for state and local governments, and hospital funding. In the end, money for hospitals and coronavirus testing was added onto the small business relief package, but other additions were left off.
Lawmakers are analyzing the successes and failures of the last wave of funding as they make plans going forward. Outcry about the program erupted when news broke that large hotel and restaurant chains had soaked up funding while some local businesses were left with nothing. The next wave of funding will go to many of those local businesses who did not receive money they applied for from the first relief package.
Some larger companies have also stepped in to rectify the situation. On Monday, the CEO of Shake Shack announced that the burger joint would return its $10 million in loans to make room for more fragile businesses without as much access to capital.
Banks also voiced anger over a lack of instruction about how to distribute money as applications for loans flooded their systems. Lawmakers hope that the distribution of this next wave of relief will be more smooth, and will help businesses keep their heads above water until the coronavirus storm passes.
The bill, which is supported by the White House, now makes its way to the House of Representatives where it could be voted upon as soon as tomorrow.
Running a business during a time of economic uncertainty is stressful and we want to help make it easy for business owners to compare their small-business financing options. We’ve added offers from a number of lenders, including payment protection loans, to Lantern —a marketplace for financial products that is owned and operated by SoFi.
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