The government money for small business loans is gone. Now what?

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On Thursday morning, the $ 349 billion small business emergency loan program officially ended. The Small Business Administration has officially run out of money for the paycheck protection program, according to a message to lenders posted on the administration’s website.

At the end of the line : Treasury Secretary Steven Mnuchin and Democrats are discussing Thursday to try to reach agreement on a package that will immediately increase funding for the program. But they are not there yet and it is no longer a theoretical exercise. The program had, and continues to have, glitches and difficulties. But it also hit $ 349 billion in less than two weeks. This is how urgent it is for small business owners. This is how desperate and dire the economic situation is in the midst of the coronavirus pandemic.

House Speaker Nancy Pelosi said in her weekly call with reporters on Thursday that negotiations are continuing, reiterating Democratic demands for additional funding for state and local governments and hospitals.

“Right now we are in these negotiations. My team and that of (Senatorial Minority Leader Chuck) Schumer spoke to Secretary Mnuchin yesterday and will do so again today,” Pelosi said during his speech. weekly call to the press. “We want to support what we’ve done with the (Paycheque Protection Program) but we want to make sure that as it gets more money, a lot more people have more access to credit.”

The Senate meets for a pro forma session at 3 p.m. ET. A deal must be reached before then so that the money can be replenished this week. Democrats and Treasury Department expected to continue negotiations behind closed doors

Numbers

As of 6:30 a.m. ET, $ 338 billion in loans were approved, according to a Small Business Administration official. At 10 a.m. ET, the agency posted a message on its website.

“The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available credits,” the notice said. Likewise, we are unable to enroll new PPP lenders at this time.

What this means: The Small Business Administration sent a notice to banks on Wednesday night making it clear that funds allocated to the program were about to run out, according to a copy sent to CNN.

“Once the authorization limit is reached, the SBA will not be able to accept any new applications for the paycheck protection program,” the update tells lenders. Also note: “SBA is unable to maintain a queue for PPP applications. ”

This is a first come, first served program. Once funding is exhausted, the application queue can no longer be maintained. This has implications for when Congress actually reloads the funds.

Dead end

There is still a legislative deadlock between Republicans and Democrats on how to move forward. While early conversations included discussions of increasing money for the Small Business Administration loan program and for hospitals at the same time, there are real complications in making this package bigger than SBA loans. .

As one assistant put it, “When you work with no room for error, you have to get everyone’s support. It’s as simple as that.

Negotiating more money for hospitals opens a box of worms about how that money is going to be spent. Which states will get it? And how to prioritize them? New York has been at the epicenter of the coronavirus, but hospitals across the country have decided to stop elective surgeries, a major source of their revenue stream. This is as true for a rural hospital in South Dakota or Montana as it is for a hospital in New York. And rural hospitals are already operating with slimmer profit margins.

The aides involved in the talks do not expect a deal on Thursday, given these factors. But everyone involved is aware of the urgency – and the potential political backlash to let the program expire. It can drive things.

Republicans criticized Democrats for maintaining a sharp increase in funding, with parliamentary minority leader Kevin McCarthy telling his own press conference that “now is not the time for politics.”

McCarthy, a Republican from California, also said funds for state and local governments were not yet depleted.

Pelosi countered, saying it is “obvious” that hospitals and state governments need more money during the coronavirus crisis.

“They need the money – we understand that and we are ready to give them that money – but we also need the other money,” she said.

Imminent concern

Deadlines are extremely important at Capitol Hill. They lead negotiations, help reach agreement and force compromise. There is concern that if a deal is not reached today, not only will the program continue without replenished funds over the weekend, but possibly the rest of the month. That’s a pessimistic view of things, but it’s a concern that several people involved with the program have raised with CNN over the past 24 hours.

The Mnuchin factor

Republican discontent over Mnuchin’s negotiations with Democrats is not new, but it is certainly more prevalent right now. GOP leaders have stayed the course to keep this bill limited to SBA funding from the start. Mnuchin is engaged in talks with Democrats. That alone drew criticism. But there are also concerns about what kind of deal he would be willing to strike with the Democrats.

“It’s not just a Mnuchin-Dem deal,” a GOP aide told me. “Each of our guys has to sign this to make it pass. He can’t forget it.”

Mnuchin has been the Trump administration’s negotiator for the past year. He has a relationship with Democratic leaders in Congress – and it’s a good working relationship by any means – and he’s been able to strike deals on major issues, ranging from raising the debt ceiling to a agreement on budget and spending to the greatest economic emergency. relief in the country’s history. But the dynamics of these talks in particular are different.

The point here: there is no margin for error when the only way a bill can be passed by the Senate is unanimous consent. Any deal Mnuchin makes with Democrats must be signed by Republicans in the Senate. And Senate Republicans aren’t in the mood for dealing right now.

“The conclusion of the agreement is entering phase four,” the aide said. “It’s just about unlocking emergency funds.”

What you will see on Thursday: There is another pro forma session this afternoon, but if no deal is found, aides say the plan isn’t for Senate Majority Leader Mitch McConnell to call for more. money for the SBA. Instead, expect the Kentucky Republican to hold future pro forma sessions and potentially handle other administrative affairs (aka: moving people who were due next week if the Senate returned to Washington.)

Why not put Democrats back on the spot? Part of the complexity for McConnell here is that Mnuchin does a lot of the negotiations directly with the Democrats. Schumer has repeatedly boasted that he has calls with the Secretary of the Treasury and that Democratic House and Senate staff had a meeting with Treasury staff on Wednesday. These negotiations have taken center stage largely, and space for these conversations is essential if a final agreement is to be reached.

If you read tea leaves: Pelosi’s statement on Wednesday did not exactly reveal Democrats are close to reaching a deal with Republicans on money for the Small Business Administration. Pelosi’s statement said that “as has become clear from last week, the Republicans’ bill that does not address these critical issues cannot obtain unanimous consent in the House.”

But she also appeared to be asking for less than the week before, saying she wanted more money for hospitals and local governments and the assurance that small businesses and others who struggled to access PPP loans were getting money. aid.

The pressure comes from all directions: What has changed in the past few days is that outside groups are calling – in a united front – on Congress to quickly approve this money. While the same groups denounced early problems with the loan program, they are now desperate to get their members to get the money they need and collectively lobby Congress to make it happen.

This story was updated with additional developments on Thursday.

CORRECTION: This story has been updated to correctly identify the Small Business Administration.

CNN’s Haley Byrd, Clare Foran and Suzanne Malveaux contributed to this report.


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