Treasury Department officials are preparing to ask Congress to swiftly commit another $200 billion to replenish a new small business coronavirus program that’s being overwhelmed by surging demand, according to two people briefed on the pending announcement.
The treasury’s request could come as soon as Tuesday, though details remained in flux as policy makers scrambled to evaluate the program’s design. The two people spoke on condition of anonymity as the deliberations remain ongoing.
The pending request is being designed to backstop a $349 billion small business loan program that was created as part of the $2 trillion coronavirus rescue bill enacted late last month. Banks and the Small Business Administration have been overwhelmed by applications since the program began operating on Friday, leading President Donald Trump, Sen. Marco Rubio, R-Fla.—who authored the program—and others to predict the need for more funds.
That Treasury would make the request on Day Three of the program’s existence underscores the surging demand for businesses to obtain financing as many of them struggle to avoid closing. The small business program has ramped up more quickly than other elements of the rescue bill—including unemployment insurance and payments to individual—but demand has still outstripped expectations.
Businesses with fewer than 500 employees are eligible for loans of up to $10 million. The loans will be forgiven, meaning business owners won’t have to pay them back, if they meet certain conditions, including using 75 percent of the money to retain or rehire employees.
Bank of America said Monday that it had received 178,000 applications from firms seeking $32.9 billion in loans as companies clamor to qualify for the $349 billion Small Business Administration program.
Wells Fargo didn’t begin taking applications until Saturday and by Monday morning said it had reached the $10 billion cap it had set for loans under the program. To deal with the crushing demand, the Federal Reserve launched a system for banks to offload these assets so they could originate more loans.
Democrats and Republicans have commented in recent days that the $349 billion program would likely need to be expanded, but Democrats have called for other extensions too, such as more unemployment insurance benefits for laid off workers. It’s unclear whether Congress would move to quickly pass a small business program extension alone or seek to package it with other changes.
This program is supposed to encourage small businesses to stop laying off employees, after 10 million workers sought unemployment claims late last month. The unemployment rate is expected to surge far beyond 10 percent this spring, and it could stay there into next year. White House officials have said they want to help enact policies that will lead to a sharp economic rebound this year, but economists have predicted that is unlikely to occur.