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Republicans say Democratic demands would gum up small-business loan program


WestVirginiaRebel

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WestVirginiaRebel
republicans-say-democratic-demands-would-gum-up-small-business-loan-program

Congressional Republicans say that Democrats' demand to restructure the small-business relief program by setting aside funds for community-based lenders is unworkable and would bring the relief program to a standstill.

 

Disagreement over the Democratic request is part of the holdup as both parties attempt to approve an additional $250 billion in forgivable loans for the Small Business Administration's coronavirus relief program, called the Paycheck Protection Program, which was established to help small businesses as part of the massive $2.3 trillion CARES Act relief package that President Trump signed last month.

There is much anxiety that the program could run out of money before the end of the week because $270 billion of the $350 billion originally allocated for the fund had been claimed as of Tuesday evening. According to the Senate Committee on Small Business and Entrepreneurship, the program is burning through more than $3.5 billion every hour that loans are processed.

Congressional Democrats have requested that $60 billion of the small-business relief program be set aside for community-based lenders in the hopes of ensuring that vulnerable small businesses and underserved communities seeking loans are not left behind. Community-based lenders are typically small financial institutions with a focus on their local community and are designed to provide financial assistance to small businesses that have often been turned down by traditional banks. Democrats claim that the program has been slow to help some small businesses, especially ones that are rural or run by minorities, women, or veterans.

"Small businesses are already being hurt because they’re not being served by the big banks that have chosen to only lend to their existing customers," said a senior Democratic aide in the House of Representatives, "and, even then, in many cases, only when they already [have] lending relationships. They haven’t really opened up to new customers."

Thus far, authorized banks in the program are lending more to businesses receiving larger loans with payrolls larger than minority businesses typically have, according to analysis done by the Center for Responsible Lending, a nonprofit group that advocates for boosting consumer financial protections.

Republicans on Capitol Hill said they agree with Democrats regarding the need to serve vulnerable communities and minority-owned businesses better during the coronavirus pandemic but disagree strongly that the $60 billion set-aside Democrats want would help achieve that outcome.

“The Paycheck Protection Program is burning through over $3.5 billion an hour. Creating a set-aside pool of money is not just unworkable, it would slow down the program at a time when small businesses need it most,” said a senior GOP Senate aide.

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Remember when Democrats were the party of the little guy?

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