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What's in the nearly $500 billion deal to protect small business from coronavirus fallout

Ben Werschkul
·Senior Producer and Writer
·7 min read

A deal to provide additional pandemic relief for small businesses, hospitals and others appears set to get through Capitol Hill in the coming days and then become law later this week.

On Tuesday, President Trump urged Congress to pass the deal and said he would sign it even as lawmakers scrambled to put the final bill together. Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer soon officially announced the deal and text of the legislation began to circulate.

The centerpiece of the deal is additional funding for the Trump administration’s Paycheck Protection Program (PPP) aimed at small businesses. The $349 billion initially allotted for the program ran out of money last week after just 13 days because of outsized demand.

Over $150 billion is included for other priorities like testing, another business loan program and hospitals.

The money is intended to be a bridge between the CARES Act, signed into law on March 27 and a Phase 4 deal that could be weeks away and might include a range of controversial issues like vote-by-mail and infrastructure spending.

Here’s a rundown of where lawmakers ended up after weeks of negotiations.

(L-R) Senate Majority Leader Mitch McConnell, Secretary of Treasury Steven Mnuchin, and Senate Minority Leader Chuck Schumer hold a meeting to discuss a potential economic bill in response to the coronavirus, COVID-19, in Washington, DC, on March 20, 2020. - Senate Majority Leader Mitch McConnell unveiled on March 19, an economic rescue plan to send $1,200 direct checks to taxpayers, $300 billion for small businesses to keep idled workers on payroll and $208 billion in loans to airlines and other industries. (Photo by SAUL LOEB / AFP) / The erroneous mention[s] appearing in the metadata of this photo by SAUL LOEB has been modified in AFP systems in the following manner: [2020] instead of [2019]. Please immediately remove the erroneous mention[s] from all your online services and delete it (them) from your servers. If you have been authorized by AFP to distribute it (them) to third parties, please ensure that the same actions are carried out by them. Failure to promptly comply with these instructions will entail liability on your part for any continued or post notification usage. Therefore we thank you very much for all your attention and prompt action. We are sorry for the inconvenience this notification may cause and remain at your disposal for any further information you may require. (Photo by SAUL LOEB/AFP via Getty Images)
Senate Majority Leader Mitch McConnell, Secretary of Treasury Steven Mnuchin, and Senate Minority Leader Chuck Schumer, shown here in March, were three of the key negotiators of the deal. (SAUL LOEB/AFP via Getty Images)

More than $300 billion for the ‘Paycheck Protection Program’

The core part of the deal is additional money for the PPP which, despite myriad difficulties, has become a lifeline for small businesses.

The program, which disbursed $349 billion already, offers forgivable loans managed by the Treasury Department and the Small Business Administration. They are designed to cover U.S. businesses with 500 or fewer employees that have been negatively impacted by the coronavirus and the broader economic shutdown. The loans can be made for up to 2.5 times the average monthly payroll of a business but can’t exceed $10 million per business.

An additional $320 billion has been appropriated for the program with $60 billion of that earmarked for small banks. “This is even more money than Senate Republicans first requested” Leader McConnell noted in a statement.

On Sunday, Treasury Secretary Steven Mnuchin said the new funding “should be sufficient to reach almost everybody,” but many are wondering how quickly this next round of funding will run out as thousands of small businesses still wait for approval.

Early in the negotiations, Republicans wanted additional money for the PPP only, without any changes to the program or funding for other things. Democrats supported the money for the PPP but held up the deal so they could secure additional provisions.

WASHINGTON, DC - APRIL 20: U.S. President Donald Trump speaks at  the daily coronavirus briefing at the White House April 20, 2020 in Washington, DC. Oil prices fell below zero today due to a collapse in energy demand and near full capacity of storage tanks in the U.S., brought on by the COVID-19 pandemic lockdown. (Photo by Alex Wong/Getty Images)
On Monday, President Trump said the Paycheck Protection Program has "helped a lot of people." (Alex Wong/Getty Images)

In interviews, Senator Schumer (D-NY) noted that Democrats got changes in how the PPP actually works.

On Tuesday, he said on CNN that Democrats insisted that a chunk of the additional PPP money “be separate from the competition with the bigger companies." He said, in contrast to how the PPP operated previously, money will be set aside to "go exclusively to the unbanked, to the minorities, to the rural areas and to all of those little mom and pop stores that don't have a good banking connection and need the help."

The program has come under criticism after large restaurant chains like Ruth’s Chris Steak House, Shake Shack, and Potbelly Sandwich Shop all received loans while others missed out.

Billions for testing and a possible ‘national testing strategy’

The most contentious part of negotiations were the provisions over testing.

The Trump administration has been at odds with Democrats and governors as the president has often insisted that testing is each individual state’s responsibility. Governors have often instead called for more involvement from the federal government.

In an interview Monday night, House Speaker Nancy Pelosi called for the the president to “stop misrepresenting about the testing.”

Schumer, on the Senate floor on Tuesday announcing the deal, said the bill is a “down payment on a national testing regime,” and it’s now “up to the administration to implement a national testing strategy” as part of the process of disbursing the funds.

The plan includes $25 billion that will, according to the bill text, help “research, develop, validate, manufacture, purchase, administer, and expand capacity for COVID-19 tests.” The money will be divided between states and federal agencies.

New York Gov. Andrew Cuomo visited Trump at the White House on Tuesday and said testing was the focus on his trip.

The White House had already made an “an unprecedented investment in testing,” Mnuchin said on Sunday. He also signaled that testing will likely be a big feature of the phase 4 deal with provisions to be considered around technology and testing, but said Trump “wants to get this over the finish line.”

$60 billion for the SBA’s Economic Injury Disaster Loan program

The deal includes money for another Small Business Administration lending program, called Economic Injury Disaster Loans (EIDL).

This program is designed to provide loans as well as up to $10,000 in immediate cash advances to businesses. The SBA reported that, as of April 20, it had given out nearly $3.3 billion in EIDL grants and $5.5 billion in loans.

The SBA currently has a message on its website saying it can’t accept new applications due to a lack of funding.

One hundred U.S. Representatives – 50 Republicans and 50 Democrats – recently sent a letter to push for this funding, noting that many businesses are especially in need of EIDL funds because they are “not good candidates for the PPP due to its requirements or are not eligible for that program at all.”

$75 billion for hospitals

Democrats initially asked for $100 billion for hospitals and health-care systems; the final deal includes $75 billion, according to Schumer. This comes on top of $100 billion already allocated for hospital and public health funding in the CARES Act.

The bill specifies that the funds can be used both to respond to coronavirus and also help make up for “lost revenues that are attributable to coronavirus.”

Mnuchin described the deal as focused both on hospitals that are overwhelmed with coronavirus cases, as well as hospitals that have been impacted because of the ban on elective surgery.

Trump suggested hospitals may soon get new guidance from Washington about opening up, where appropriate, to a wider range of procedures. “A lot of hospitals were closed, they couldn't do any elective surgeries,” he said on Sunday, adding “they'll be able to start doing that.”

Democrats also sought to provide funding for cities and states in this legislation. That was not included in the end; however, Trump has repeatedly said he is in favor of more money for states, and tweeted that it would be part of the next negotiation alongside issues like infrastructure spending and tax cuts.

Cuomo said he thought it was a "terrible mistake" not to provide the funding for states in this deal.

Lawmakers hope the current deal will pass both chambers of Congress by Thursday and be signed into law by Trump by the end of the week.

This story is being updated as the bill makes its way towards President Trump’s desk.

Ben Werschkul is a producer for Yahoo Finance in Washington, DC.

Read more:

Why chains like Shake Shack, Ruth's Chris, Potbelly qualified for PPP small business loans

Coronavirus-spurred fights over vote-by-mail and the Post Office are coming to Congress

The $349 billion coronavirus loan program for small businesses is out of money after 13 days

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