News & Media
Coronavirus April 16 Update: Negotiations Continue as SBA Loan Funds Run Out, Small and Mid-size Cities Plead for Relief and More Emergency Funds are Headed to Health Care Providers
Still no deal on additional SBA loans as program funds run out
A hugely popular loan program for small businesses hammered by COVID-19 is tapped out, and there's no deal yet to replenish it, though bipartisan talks are set to continue Thursday.
The top Republican architect of the loan fund says his party is eyeing compromises with Democrats in order to get a deal over the finish line and allow the Small Business Administration to start processing aid requests again.
Senate Small Business and Entrepreneurship Chairman Marco Rubio, R-Fla., said he thinks enough Republicans will go along with deals on unrelated items like aid to hospitals, states and cities being negotiated by Treasury Secretary Steven Mnuchin and Democratic leaders.
"I think there's strong support for the idea of helping local communities," Rubio said in an interview Wednesday. "Every senator, including Republicans, have cities and hospitals, rural hospitals, in their state."
Rubio said the main stumbling block at this point was how to ensure fairness for all states in the distribution of direct aid, as well as additional money for hospitals.
Democrats are seeking another $150 billion in state and local assistance as well as $100 billion in direct payments to hospitals, mirroring the funding provided in the earlier $2.3 trillion aid package (PL 116-136) that included the initial batch of small-business loans.
Senate Minority Leader Charles E. Schumer, D-N.Y., spoke with Mnuchin by phone earlier Wednesday, a Schumer spokesman said. Top aides to Schumer as well as Speaker Nancy Pelosi, D-Calif., later met with Mnuchin and Treasury staff into the evening.
But it wasn't clear if lingering disagreements would be wrapped up in time for the Senate to take up a bipartisan agreement during its pro forma session scheduled for Thursday afternoon. The House has a similar session scheduled for Friday.
Democrats agree on the need for more small-business funds, even though $349 billion worth began to flow as recently as April 3. But the dispute has centered around how to allocate the money as well as provide additional relief for state and local governments, hospitals and low-income households.
"I can't guarantee we can get an agreement that we will pass on Friday, but that would be optimal if we could," House Majority Leader Steny H. Hoyer, D-Md., said on a call with reporters Wednesday. Jennifer Shutt and Jim Saksa have the full story here.
More emergency funds heading to health care providers
Centers for Medicare and Medicaid Services Administrator Seema Verma told reporters the department will be distributing the second wave of a $100 billion emergency fund to medical providers this week.
But Verma declined to provide details around how much funding will be distributed to which types of providers, only saying that coronavirus hotspots will be prioritized. Providers that rely on Medicaid or treat larger portions of uninsured patients will receive priority in the third round of funding.
Advocacy groups for safety-net hospitals have been awaiting details on the money after CMS distributed $30 billion based on Medicare fee-for-service revenue last week. The formula allowed CMS to send the money quickly, but ultimately shortchanged many hospitals that need it most.
Puerto Rico Gov. Wanda Vazquez Garced sent a letter to Verma Wednesday outlining the need for changes, noting that 75 percent of Puerto Rican Medicare beneficiaries are covered by Medicare Advantage, not traditional fee-for-service.
The department also announced that it is doubling reimbursement rates for high-capacity COVID-19 testing as the country struggles to ramp up capabilities. Lab groups had complained that payment rates do not cover costs of the more advanced machines, and Verma said the department was aware that many tests were not being used.
The move comes as new data shows that testing rates in the country have declined amid supply shortages, and as pressure builds to allow Americans to return to work.
Overlooked cities plead for relief funding
Mayors of small and mid-sized cities, arguing they were shortchanged in last month's coronavirus relief package, are pushing tweaks to that program as well as a huge new cash infusion.
That $2.3 trillion measure (PL 116-136) included $150 billion for state and local governments. But the package offered no direct funding to cities with under 500,000 residents. And with city budgets now facing cuts from the economic shutdown, the National League of Cities and the U.S. Conference of Mayors called for $250 billion in fresh federal aid for municipal governments of all sizes.
"Congress has offered no direct support for cities like ours," said Bryan Barnett, the Republican mayor of Rochester Hills, Mich., a city of about 75,000 in the Detroit metro area. "This is not a big-city problem. It is an every-city problem."
Mayors and other city officials back a proposal from Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Charles E. Schumer, D-N.Y., that would provide $150 billion more for state and local governments, though they say more is needed just for municipalities.
The Democratic measure would distribute $53.55 billion of the money directly to localities using the Department of Housing and Urban Development's Community Development Block Grants formula.
Under that construct, 70 percent of the money goes to cities with at least 50,000 residents, or urban counties with at least 200,000. The remaining funds would go to less populous localities.
The U.S. Conference of Mayors sent a letter Monday to Schumer and Pelosi lining up behind their proposed funding formula as well as loosening restrictions on the earlier round so that aid can be used to backfill general budget shortfalls.
Fund managers seek aid access to PPP loans
Small businesses backed by private equity or venture capital are having a tough time gaining access to the new Payment Protection Program.
The concern of regulators is that the overall portfolio of those firms may be anything but small.
Small businesses can get short-term loans through private lenders to stay afloat while contagion countermeasures shutter most of the economy. If borrowers use the money to cover payroll and other fixed costs, they won't have to pay it back.
The problem for small businesses whose owners include private equity or venture capital funds is that they may be deemed part of a larger company, an affiliation which can put them above the 500-employee threshold that defines a small business.
Venture capital funds typically invest in start-up companies with promising growth prospects, especially technology. Private equity funds, by contrast, typically take controlling positions in more established companies, often to reduce costs.
Rubio, one of the PPP program's architects, told CQ Roll Call that fund managers shouldn't be included in an additional aid package.
"This program is for the restaurant down the street," Rubio said. "The dry cleaner. The small, family-owned manufacturer." Jim Saksa has the full story here.