A partisan Senate fight has blocked two competing plans that would have provided a quick $250-billion infusion for a popular new federal loan program for small businesses—including many engineering and construction firms—hit hard by the coronavirus outbreak.

The outlook for the increased funds has turned uncertain as congressional leaders sent mixed signals.

Senate Majority Leader Mitch McConnell (R-Ky.) on April 8 had sought to have the chamber approve a White House plan to add $250 billion to the $349-billion Paycheck Protection Program (PPP).

The program, created under the Coronavirus Aid, Relief and Economic Security, or CARES, Act, provides loans to small companies, nonprofits and other entities. The loans can be forgiven if borrowers use at least 75% of the proceeds for payroll, and the rest for items such as utility expenses and health insurance premiums.

Passage would have required unanimous agreement but Sen. Ben Cardin (D-Md.) objected, sidetracking the GOP measure.

Sen. Chris Van Hollen, also a Maryland Democrat, then offered an alternative plan backed by his party. It also would provide $250 billion for PPP, though with changes, including a specified participation level for community lenders. The proposal also would add $150 billion in assistance for states and localities and $150 billion for hospitals.

But McConnell objected to the Democrats’ plan, derailing it.

Then in an April 10 statement, Senate Minority Leader Chuck Schumer (D-N.Y.) said he had had "a constructive call" with Treasury Secretary Steven Mnuchin, the Trump administration's point man in negotiating the CARES Act.

Schumer said Mnuchin agreed to bipartisan talks on an interim emergency bill. Schumer added, "There's no reason why we can't come to a bipartisan agreement by early next week." That raised hopes of a compromise.

But the following day, McConnell and House Minority Leader Kevin McCarthy (R-Calif.) shook those hopes, stating, "Republicans reject Democrats' reckless threat to continue blocking job-saving funding unless we renegotiate unrelated programs which are not in similar peril." They said they would "seek a clean PPP funding increase."

AGC, ACEC reactions

Brian Turmail, a spokesman for the Associated General Contractors of America, said via email on April 8, “While we ultimately expect Congress to do the right thing, it is troubling that the congressional leadership appears to be at an impasse on providing additional funding for the Paycheck Protection Program loans.”

Turmail added that 74% of AGC’s member companies have reported that they have applied to banks for the PPP loans, or intend to apply, but only 10% say they have had loans approved.

He said, “Our members are worried because the program works on a first-come, first-served basis and they already lost several days because of the initial questions about the [Small Business Administration] guidelines.”

Jeff Urbanchuk, a spokesman for the American Council of Engineering Companies, said the Senate stalemate is a disappointment. Urbanchuk said via email that the Paycheck Protection Program “is a needed response to this crisis, but it will need a substantial new infusion of funds to ensure that it can properly serve a significant portion of America’s engineering industry.”

He added, “We’re hearing from more and more firms that their loan requests are getting approved, but too many are still in limbo as lenders seek additional guidance and SBA struggles to handle the volume.”

ACEC would like to see Congress add more funds in other sectors. Urbanchuk said, “We also know that our state government clients need help as well, and we hope that lawmakers and the White House will sort this out quickly so that we can move the legislation as soon as possible.”

War of words...and an opening

After the earlier Senate standoff, leaders from each party had leveled criticism at the other side.  McCarthy told reporters on a conference call that Senate Democrats’ blocking of the GOP plan was “disgusting.” McCarthy added, “I do not think that we should play politics with a pandemic.”

House Speaker Nancy Pelosi (D-Calif.), in her press briefing shortly after McCarthy's called McConnell’s legislative move a “stunt.”

She said that the GOP measure would not have cleared the House. Pelosi said the proposal sought a large amount of funds and came on short notice with insufficient backup information to justify it. She said it was a “request for a quarter of a trillion dollars, in 48 hours" and added, "Really?”  

Pelosi added, ”We need more data. We need more oversight in terms of how this works and how we can make it work better….”

Still, Pelosi left the door open to a possible deal on additional PPP funds. She noted that loans for about one-third of the program's $349 billion have been approved. "They still have two-thirds of it left," she added. "So we have time to negotiate, to see how and where and when we should have more money there."