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President Trump on Tuesday touted the effects of the Payment Protection Plan in keeping small businesses open during the coronavirus pandemic, saying that, since the PPP launched, the Small Business Administration processed as many loans over a two-week period as it has in 14 years.
“That’s some record,” Trump said during a news conference in the White House’s East Room. “Our swift actions supported or saved 30 million American jobs at least.”
Trump recently signed another stimulus package that injected $310 billion of loans after the original money ran short due to an overload of businesses applying for the relief.
The most recent package is meant to help small businesses retain workers or rehire those who they laid off in response to the virus outbreak. Restaurants, retailers, gyms and other businesses were forced to shut down to try to contain the virus’ spread, and other companies have seen a steep drop in revenue as customers stayed home or cut back their spending.
Banking industry groups, however, said Tuesday that they are facing a bottleneck in receiving the funds as the SBA’s loan processing system is still unable to handle the volume of loan applications from business owners trying to get aid under the PPP, part of the government’s $2 trillion coronavirus aid package. The SBA has said the slowdown is due to its attempts to limit the amount of loans any bank can submit at one time. But some banks say they’re not able to get any applications into the system.
On Tuesday afternoon, the head of the SBA tweeted that the agency had processed $50 billion in loans in the 24 hours after the program resumed at 10:30 a.m. ET Monday.
The $349 billion first round of funding was exhausted in less than two weeks after the SBA approved 1.7 million loans. That initial round was also slowed by computer issues at the SBA. In this round, banks have reported that they were being allowed to submit only 350 applications an hour, if that many. Meanwhile, they have thousands on hand.
“I don’t know of any bank who’s reaching 350 per hour,” said Richard Hunt, president of the Consumer Bankers Association. He said there appeared to be technical issues at the SBA similar to ones that held up processing early in the first round of funding.
To get the loans forgiven, companies need to spend 75 percent on payroll within eight weeks of receiving the money. The other 25 percent can be spent on rent, utilities and mortgage payments. Otherwise, the loan has generous terms: Only a 1 percent interest rate and six months before any principal is due.
Many of the small companies that were able to obtain a loan are having second thoughts about rehiring all their workers and a few plan to return the money. Others will use what they can on rent and utilities, and will use some to rehire a portion of their laid-off staff. But most are unsure they will be able to reopen eight weeks from now. They see little point in rehiring all their workers, paying them to do little or nothing, and then potentially laying them off again if business remains weak two months from now.
When questioned on the possibility of another stimulus package that would include some other forms of relief for Americans, Trump did not say anything about any more direct payments but said he supports a payroll income tax cut.
“I would love to see that happen,” he said. “It would be an incentive for people to come back from work.”
Trump added that he is open to talking about more relief for states and cities, but that they would have to give back in exchange. He suggested that if cities wanted any federal relief, they would have to give up their status as sanctuary cities.
Governors and other elected officials across the country have asked the White House and Congress for aid as they recover from the economic fallout tied to the public health crisis.
“He needs to speak up with energy to move the Senate. He understands the economy. He understands New York City,” New York City Mayor Bill de Blasio said on “Sunday Morning Futures.” “If we can't pay for basic services, we won't have a strong economy. We need to hear the president's voice — we're not hearing it so far."
The Associated Press contributed to this report.