US House working on extra funds for hard-hit small businesses

Democrats and Republicans in the United States House of Representatives were working late into the evening on Monday on the details on another stimulus package, worth nearly $500bn, for small businesses and hospitals affected by the coronavirus pandemic as well as for more aggressive testing for the virus.

The legislative package links efforts by the administration of President Donald Trump to replenish a fund intended to shore up small businesses reeling from an outbreak that has shuttered economic activity across the country with Democrats’ demands for more money for hospitals and virus testing.

If the deal is approved, the government’s Paycheck Protection Program for small businesses would get $300bn on top of the $349bn in the last stimulus measure. The Small Business Administration programme has been swamped by companies applying for loans and reached its appropriations limit last week after approving nearly 1.7 million loans. That left thousands of small businesses in limbo as they sought help. An additional $60bn in disaster loans and grants is also included in the package.

The SBA loans, based on a company’s payroll costs, offer owners forgiveness if they retain workers or rehire those who have been laid off. The law provides for forgiveness for companies in any industry – even businesses like hedge funds and law firms. There is a limit of $100,000 on the amount of employees’ compensation that can be considered when loan forgiveness is calculated.

The measure would also include $75bn for US hospitals straining under a ballooning coronavirus caseload as well as those struggling to stay financially afloat after suspending elective surgeries during the pandemic. Another $25bn will be added for COVID-19 testing, something states have said was urgently needed.

Democrats had been insisting on boosting funding to cash-strapped states and local governments whose revenues have cratered. In talks over the weekend, they had proposed $150bn for the effort, but the administration wants money for state and local governments, as well as for food stamps, to be included in a subsequent package.

To assuage Democrats in the House, two Senators on Monday proposed a separate $500bn rescue package for state and municipal governments that would allocate money based on states’ populations, infection rates and revenue losses to ensure that money goes where it is needed most.

“The current bill coming out will not have this aid, or any aid, for states and municipalities. It kind of makes sense, though, because we don’t yet know what the toll is,” Republican Senator Bill Cassidy, a sponsor of the legislation along with New Jersey Democrat Bob Menendez, said on a conference call with journalists.

Cassidy and Menendez said they hoped their bipartisan bill could provide a framework for what they dubbed “Covid 4”, a subsequent tranche of coronavirus aid.

“Covid 3.5 [the current bill] is more focused on business and hospitals, primary, and testing,” Menendez said. “We think this is well poised for what I believe will be a Covid 4.”