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Democrats are in favor of the new funding – with their own terms.

At the end of the line : President Nancy Pelosi and Democratic Senate Leader Chuck Schumer from New York have presented their demands for any swift action on small business finance. Republicans, CNN aides say, are not open to the additions now, seeing them instead as part of the next back-up plan.

Buckle up, it could get ugly quickly.

At this point, $ 66 billion in loans have been committed, which is obviously well below the $ 349 billion initially allocated. But the volume of requests has been enormous, according to the bank’s executives, and the problems and technical difficulties with the program created an extremely long and drawn-out process. This has led to significant anxiety among small businesses who think they will run out of funds. The extra cash isn’t just designed to top up the coffers after the initial funding is exhausted – it’s also an effort to ease and calm the application process and provide reassurance to businesses that might need the cash. in a week or two, as opposed to right away, that money will be there.

Add this reminder to your favorites: Nothing happens without the support of Democrats. Democrats control the House, and Senate Republicans need Democratic votes to advance legislation in this chamber. But it’s especially acute right now, where lawmakers aren’t coming back to Capitol Hill for weeks and if anything needs to move, it has to move unanimously.

In this spirit: Administration officials made it clear on Tuesday that they expected Democrats to return with additional demands. That this has happened is no surprise. That the requests have been so extensive, according to an official, is “somewhat surprising”.

Why it could get ugly: Republican leaders in both chambers were extremely quick to support the request for additional funding for the small business program. That’s not a huge surprise – it’s a popular idea, it’s an extremely important program, and the request came from the Republican White House.

But the Republican National Committee of Congress, the campaign arm of the House GOP, also lobbied early on to pressure Democrats to join in the swift flow of additional funds. Supporting small businesses is the epitome of the golden campaign stance for both sides. Being on the other side of this is always a risky proposition – something you can expect the Republican political arms to act on very quickly if negotiations start to drag on.

Schumer and Pelosi statement: “The heartbreaking acceleration of the coronavirus crisis demands bold, urgent and continued action by Congress to protect the lives and livelihoods of Americans. As Democrats have said from day one, Congress must provide relief additional to small businesses and families, building on the steep drop-off payment made in the bipartite CARES Act. “

A quick test

It shouldn’t be a long, drawn-out negotiation. Senate Republicans plan to move forward on adding funding on Thursday. At least for now, that is still the plan of the GOP assistants.

With senators still absent, any legislative effort must be passed by unanimous consent, which means any senator can block the additional funding. As Democrats push for their demands, this is an option for Schumer when the Senate opens on Thursday morning. But Republicans are already warning against the move, signaling a hardening of the battle lines within an extremely tight schedule.

“If Schumer wants to come to the ground and freeze the money for small business, it’s his,” a GOP aide told CNN.

The battle lines of the negotiations

Republicans: The White House has requested $ 251 billion in additional funds for the emergency small business loan program – money that would bring the program to $ 600 billion. Republicans are open to structuring some type of terms, possibly through administrative action, money to address Democrats’ concerns about underserved small businesses that are lacking. But other than that, they want the money to go clean.

Democrats: Pelosi and Schumer, in a joint statement, set out their position on Wednesday morning:

  • $ 250 billion in additional funds for small business loans, including $ 125 billion channeled through community financial institutions that focus on underserved communities
  • $ 100 billion for hospitals, health systems and community health centers
  • $ 150 billion for states and local communities
  • A 15% increase in the maximum benefit of the Supplemental Nutrition Assistance Program – otherwise known as SNAP or food stamps

Also to remember: There is an expectation that there is a quick path for this money. But it’s not just the democratic terms that members are raising – it’s the issues with the small business loan program itself.

Several members and contributors have told CNN that handing over another $ 250 billion to a program that isn’t working properly isn’t going really well. Yes, everyone wants small businesses to have the money they need, but some members are arguing that any legislation this week must include more changes to the underlying program and at the very least offer additional advice to lenders and to small businesses on who is eligible.

“If you don’t fix what’s fundamentally wrong with the program, spending more money after the hurt won’t help small businesses,” Representative Stephanie Murphy, a moderate Democrat from Florida, told CNN Tuesday night.

“We have to try to make changes a condition to hand over another quarter of a trillion dollars.”

Senator Ron Johnson, a Republican from Wisconsin, told CNN he didn’t need legislative language to include fixes, but needed the Treasury to issue additional guidance before agreeing to more silver. And, he told management that by responding to everyone to a management email sent to all GOP members on Tuesday.

From 30,000 feet on the SBA program itself

Congress, as early as this week, could approve an additional $ 250 billion in funding for a small business program that participants say is still riddled with heists and glitches.

This in itself is a pretty amazing thing to think about.

But he underlines two points: first, the urgency and the requirement of the moment. This money and this program are desperately needed. Second, lawmakers believe that the problems with the program will be resolved. “It’s not a question of if, but a question of when,” a House Republican told CNN.

Yet despite what some administration officials are saying, things are not quite going quite well yet.

According to a banking industry source, “We may have a cylinder working right now. And even that type of cylinder depends on what time of day you are using the system.”

About the numbers

The volume of applications is impressive. Bank of America has received over 250,000 requests. JPMorgan Chase received over 375,000 applications. That’s thousands of requests per hour for tens of billions of dollars in loans. But that doesn’t equal money at the door.

In fact, due to technical issues, the vast majority of the $ 66 billion in loans that have been committed to this point have not been distributed to small businesses due to problems faced by lenders in completing the process, said four industry executives at CNN.

Major issues: Technical issues improved on Tuesday. The system used by lenders to download applicant information did not completely crash as it did on Monday. Every day more and more lenders participate in the program, which increases the number of loan applications.

The Small Business Administration is expected to go live with its portal for new lenders on Wednesday.

But, an industry source said she kept hearing about widespread frustration with the system’s “very slow” operation and banks “being kicked out repeatedly when processing individual claims. “.

A bank official told CNN that it takes an average of 49 minutes for its loan officers to move a request through the process.

Almost a third of community banks still do not have access to the Small Business Administration system used to process program loans.

The biggest outstanding issue, according to several banking sources, is that the SBA has still not provided the necessary loan memo document to banks to actually finalize the loans. Therefore, money committed does not equal money at the door.

Another problem? Banks trying to get more of their employees to manually upload information to the SBA portal say they are not getting enough credentials from the SBA for all of their employees to log in.

Rubio’s frank speech

Sen. Marco Rubio, a Republican from Florida and one of the main writers of the program himself, was clear about the problems with the program, but he also made it clear that they can all be resolved over time.

Like Rubio tweeted Wednesday morning:

“The deployment of #PPP has not been ‘flawless’ and the problems have not been ‘minor’. But neither are they insurmountable. They have solutions. And @ stevenmnuchin1 has been incredibly accessible and decisive . The goal is constant daily improvement in the program. “


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