Paycheck Protection Program and targeted relief to consumers and businesses should be a priority as negotiations continue, officials say. Editor’s note: This article is available for members only.
9/29/2020 9:00
Negotiations between Congress and federal officials on additional coronavirus relief legislation are expected to resume after the Senate Committee on Banking, Housing and Urban Affairs met Sept. 24 for a hearing on the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell presented their quarterly report on the CARES Act during the hearing where members of the committee called for additional relief and expansion of the Main Street Lending Program, which supports lending to small and medium-sized for-profit businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic.
On Monday, House Democrats proposed a $2.2 trillion relief package that is an updated version of the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) ACT. The updated HEROES Act includes components of the original bill that would have significant impact on the accounts receivable management (ARM) industry related to credit reporting and restrictions on debt collections during a state of emergency, when collectors can actually help consumers more. ACA International is continuing to advocate with Congress on the proposal. The Senate is not expected to take up the full package from the House and there will continue to be opportunities for Congress to remove the problematic sections.
“America is in the midst of the fastest economic recovery from any crisis in U.S. history. The August jobs report showed that the economy has gained back 10.6 million jobs since April—nearly 50% of all jobs lost due to the pandemic,” Mnuchin said during his testimony. “The unemployment rate has also decreased to 8.4%, a notable achievement considering some people were expecting up to 25% unemployment at the height of the pandemic. Thanks to the programs provided through the CARES Act, we never got close to that figure.”
Negotiations on the fourth phase of coronavirus relief are reportedly moving forward, but Republicans and Democrats continue to debate the level of funding needed since the original CARES Act was passed in March.
“We continue to try to work with Congress on a bipartisan basis to pass a Phase IV relief package,” Mnuchin said. “I believe a targeted package is still needed, and the administration is ready to reach a bipartisan agreement.”
According to The Hill, Democrats are calling for trillions more in funding to cover unemployment insurance, support state and local governments and provide direct relief to households. Republicans favor a more targeted relief package to support schools and day care facilities and restore jobs.
Mnuchin said during the hearing there is also support for extending the U.S. Small Business Administration’s Paycheck Protection Program (PPP) to businesses in need of another loan. The PPP ended Aug. 8.
In July, U.S. Sen. Mike Crapo, R-Idaho, ranking member of the Senate Banking Committee, sent a letter to the Treasury Department on expanding the Main Street Lending Program and recommended that federal financial regulators use their existing authority to extend relief under certain provisions of the CARES Act, according to a news release.
“I agree with the need to move forward. There is broad bipartisan support for many major efforts that still need to be taken … we ought to do what we have reached agreement on,” Crapo said during the hearing.
Additional highlights from the CARES Act hearing include:
- Mnuchin said one area where Congress and regulators could advance support would be spending $130 billion already appropriated by Congress to help businesses, especially small businesses, through the PPP.
- The CARES Act has provided a lot of support to date. The risk going forward is people are spending their savings and relief dollars, especially if they are currently unemployed, Powell said. They could lose their homes if there is not more support.
- Powell and Mnuchin said consumers and businesses need support now through another relief bill. “We need comprehensive relief, it wasn’t a question of some vs. none,” Mnuchin said.
PPP Loan Forgiveness and Legislation
While Congress debates additional funding, legislation introduced in the 116th Congress would expedite and streamline the loan forgiveness process for the PPP.
A coalition of trade associations, including ACA International, is supporting legislation from the U.S. House of Representatives and Senate on loan forgiveness under the PPP, ACA previously reported. A letter from the coalition calls for Congress to pass the legislation applying to forgiveness of PPP loans of less than $150,000 through a borrower’s completion of a one-page loan forgiveness application. PPP loans of $150,000 and under account for 87% of total PPP recipients, but less than 28% of PPP loan dollars. Expediting the loan forgiveness process for many of these hard-hit businesses would save more than $7 billion and hours of paperwork.
Meanwhile, U.S. Rep. Steve Chabot, R-Ohio, ranking member of the House Small Business Committee, introduced legislation to amend the Small Business Act and the CARES Act to establish a program for second draw loans and make other modifications to the paycheck protection program, and for other purposes. Chabot introduced the bill Sept. 16 and U.S. Rep. Jaime Herrera Beutler, R-Wash., filed a discharge petition in the U.S. House of Representatives to force a vote to extend the PPP.
The discharge petition needs 218 signatures from the House to bring the bill to the floor, according to a news release from Herrera Beutler’s office.