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Senate at impasse over small business loans as funding runs dry

Small businesses struggling to secure funding
Small businesses struggling to secure funding... 02:07

Washington — Senate and White House negotiators have yet to reach an agreement to pass additional funding for the Paycheck Protection Program (PPP) to provide loans for small businesses struggling amid the coronavirus pandemic, as the last of the remaining funding for the program was exhausted on Thursday.

The Senate briefly convened for a pro forma session in the afternoon, and Majority Leader Mitch McConnell blamed Democrats for blocking additional funding. 

"Every Senate Republican was ready to act today, but Democrats would not let us reopen the program," McConnell said on the Senate floor. "It is surreal to see Democratic leaders treat support for workers and small businesses as something they need to be goaded into supporting. This should be above politics."

Republicans and the White House support a "clean" bill to add $250 billion in funding on top of the initial $349 billion allocated for the program, which was established by the $2.2 trillion relief measure signed by President Trump last month.

Democrats argue that the interim relief measure should also include support for hospitals and for state and local governments, as well as designate $125 billion specifically for minority-owned and rural small businesses. Democrats blocked a measure from passing in the Senate by unanimous consent earlier this month.

McConnell said the Senate would meet again in pro forma session on Monday.

The Small Business Association, which is overseeing the PPP, said it had reached the $349 billion limit in funding and could not accept new applications.

"The SBA is currently 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," the agency said.

Senate Minority Leader Chuck Schumer and House Speaker Nancy Pelosi have had regular conversations with Treasury Secretary Steve Mnuchin about Democratic priorities, aides said, although both sides remain at an impasse.

Both houses of Congress are set to formally reconvene on May 4, but are holding regular pro forma sessions, which does not require full attendance. The House and Senate can pass measures by unanimous consent in pro forma sessions, although any member can object and derail the process.

Meanwhile, some small businesses say that PPP is deeply flawed. The initiative lets businesses take out a low-interest loan up to 2.5 times their monthly payroll. While the loan can be forgiven if businesses use the money to keep workers on the books, it effectively forces owners to continue paying employees even when enterprises remain closed and unable to generate revenue.

The economic fallout from the coronavirus is devastating the country, as many workers are out of a job or furloughed. About 5.2 million Americans filed unemployment claims last week, and 22 million Americans have filed unemployment claims over the past four weeks.

Megan Cerullo contributed to this report.

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