$484 Billion in Coronavirus Relief Passes Senate

Plus: dozens of public companies taking small business aid

Senate Approves Another $484 Billion in Coronavirus Relief

The Senate passed an additional $484 billion in emergency coronavirus aid on Tuesday, replenishing a loan program for small businesses that ran dry last week and providing more funding for hospitals and testing.

The deal is the fourth congressional effort to address the pandemic and would bring total coronavirus relief spending to nearly $3 trillion. The package includes:

  • $321 billion in additional funding for the Paycheck Protection Program targeted at small businesses, including $30 billion reserved for community-based lenders, small banks and credit unions and $30 billion for mid-sized banks and credit unions. The PPP funding also includes $11 billion more for administrative costs;

     
  • $60 billion more for the Economic Injury Disaster program for small businesses, including $50 billion for loans and $10 billion for grants;

     
  • $75 billion for hospitals;

     
  • $25 billion for testing and contact tracing, including $11 billion to be distributed to states as well as $1 billion for the Centers for Disease Control and Prevention, $1.8 billion for the National Institutes of Health, $1 billion for the Biomedical Advanced Research and Development Authority, $1 billion for testing the uninsured and $825 million for community and rural health centers;

     
  • $2.1 billion for Small Business Administration administrative expenses.

The deal came after some two weeks of partisan impasse, after Democrats refused to pass additional funding for small businesses without more aid for hospitals, testing, states and local governments. In the end, the White House and congressional Republicans agreed to provide more money for hospitals and testing but not for state and local governments.

The bill reportedly also requires the Trump administration to establish a national strategic testing plan within 30 days. Democrats had been pushing for a national approach to testing, while Republicans and the White House said the responsibility for testing should be on states and the private sector. “The final agreement seems to strike a balance,” The Washington Post reports, “requiring plans from states and localities on how they will utilize the testing funds, and also requiring a strategic plan on providing assistance to states for increasing testing and testing capacity.”

On Tuesday, leaders of both parties hailed the deal and claimed it as a victory for their priorities.

  • Senate Majority Leader Mitch McConnell: “I am encouraged that Democratic leaders have finally agreed to reopen the Paycheck Protection Program and abandon a number of their unrelated demands. … In the week-plus while our Democratic colleagues delayed the urgent PPP funds, additional federal help for hospitals and healthcare providers became urgent as well. Republicans have always supported more medical funding as soon as necessary and I am proud this package will provide roughly $75 billion more to fund hospitals and healthcare providers in this crisis.”

     
  • House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer: “Democrats flipped this emergency package from an insufficient Republican plan that left behind hospitals and health and frontline workers and did nothing to aid the survival of the most vulnerable small businesses on Main Street.”

     
  • House Majority Leader Steny Hoyer, per Politico, told reporters Tuesday: "When you look at the package that’s going to be passed, it’s almost exactly like the one we asked for two weeks ago. We're ending up with a bill we could've passed 12 days ago."

What’s next: The House could approve the legislation as soon as Thursday in a vote requiring at least 216 members to return to the Capitol.



In a pair of tweets Tuesday afternoon, President Trump urged the House and Senate to pass the legislation and said that, after he signs it, discussions would begin on the next phase of relief, which he said would include aid “to State/Local Governments for lost revenues from COVID 19, much needed Infrastructure Investments for Bridges, Tunnels, Broadband, Tax Incentives for Restaurants, Entertainment, Sports, and Payroll Tax Cuts to increase Economic Growth.” But McConnell reportedly said the next phase wouldn’t come until the Senate is back in session, and that the growing national debt resulting from coronavirus relief efforts is "a matter of genuine concern."

Too little, too late? Even before the additional Paycheck Protection Program funding has passed, there are already concerns that it won’t be enough. “Lenders are warning their customers they might not be able to secure loans even if Congress provides an additional $300 billion as soon as this week,” Politico’s Zachary Warmbrodt reported Monday. “Banking industry representatives say the program has a burn rate of $50 billion per day and needs closer to $1 trillion to meet demand, with hundreds of thousands of applications pending.”

Mom and Pop? Dozens of Public Companies Taking Aid Meant for Small Business

Although the Paycheck Protection Program was designed to help small businesses keep their employees on the payroll, millions of dollars in assistance has been allocated to publicly traded companies, according to new research from Morgan Stanley.

At least 75 such firms have claimed $243 million from the program, including 15 with market caps of over $100 million, according to the analysis (see the chart below, via CNBC). Fiesta Restaurant Group, for example — which operates the Pollo Tropical and Taco Cabana restaurant brands, has a market cap of over $180 million and employs more than 10,000 people — received a loan of $10 million, the maximum allowed.

The loans are available to some larger companies due to a loophole in the law that allows some businesses to treat separates locations of the same chain as individual entities. Firms that use the money to cover payroll costs are eligible for loan forgiveness.

A separate analysis by the Associated Press uncovered 75 publicly traded companies that received more than $300 million in low-interest loans through the small business rescue program. The AP found eight firms that received the maximum loan amount of $10 million and said that was likely just the “tip of the iceberg.” Some companies that received loans had recently reported millions of dollars in cash on hand, the AP said, and others likely have access to other sources of assistance.

Some larger firms that received the assistance defended their participation in the program, saying they were just following the rules, with the goal of helping their employees. But critics worry that smaller firms have been shortchanged, missing out on aid that was targeted at true mom-and-pop businesses that lack access to conventional bank loans and private investors. Thousands of small business owners were reportedly shut out of the program when funds ran dry last week, including many independent restaurant owners, some of whom feel they lost out to better financed chains.

Zachary Davis, a California businessman who owns two ice cream shops, told the AP that “if you’re a little guy, chances are you’re going to the back of the line.”

Howard Schultz, the billionaire founder of the Starbucks coffee empire, seemed to agree. “I think you’ve seen some pretty shameful acts by some large companies to take advantage of the system,” Schultz said.

Restaurants Want Their Own $240 Billion Bailout

The restaurant industry wants its own $240 billion bailout package, saying that the legislation passed by Congress last month makes it more appealing for its employees to draw unemployment than come back to work, Politico’s Ian Kullgren reports:

“The new Paycheck Protection Program waives repayment of small business loans if the borrower uses 75 percent of the money to maintain payroll, a measure intended to reduce layoffs. But with the expanded unemployment benefits included in the stimulus bill, some workers can as much as double their weekly checks if they stay unemployed.



“The mismatch is particularly acute for restaurants, cafes and small shops — nonessential businesses where pay scales tend to be low that have been put into indefinite hibernation. The National Restaurant Association told Congress Monday that more than 60 percent of restaurant owners believe existing assistance programs, including PPP, are insufficient to keep employees on payroll and asked for $240 billion in aid targeted to their industry.



“Restaurants represent less than 9 percent of Paycheck Protection loan recipients, but as of March accounted for the majority of layoffs nationwide as the contagion took hold.”

The Paycheck Protection loans are meant to cover payroll expenses for eight weeks, a shorter timeframe than the enhanced unemployment benefits provided by Congress.

The National Restaurant Association also asked Congress to allow businesses to defer the start of PPP loans until local lockdown orders are lifted and to allow more than 25% of borrowed money to be used on rent and other fixed costs.

Kullgren notes that some small business advocates and lawmakers want the U.S. to implement a European-style program to provide direct payments to businesses rather than loans to help cover payroll. But, he adds, “such ideas have little traction in the current political environment.”

Number of the Day: 7%

That’s how much U.S. firms must pay in tariffs on imported N-95 masks, a key piece of equipment worn by medical providers confronting the coronavirus pandemic. Other critical medical goods getting hit with tariffs include hand sanitizer (5%), protective medical clothing (4.5%) and goggles (2.5%).

A former Trump administration trade official, Kelly Shaw, told Politico that she hopes President Trump will remove the tariffs, which predate his administration. “Since the U.S. government is using taxpayer money to buy massive amounts of those goods to refill the Strategic National Stockpile and to distribute to hospitals,” Politico’s Adam Behsudi wrote Tuesday, “Shaw argued it makes little sense to increase the cost of those purchases by leaving the duties in place.”

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