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The US Small Business $350 billion Paycheck Protection Program (PPP) has been fully drawn down. The US Administration is seeking to add another $250 billion, however Nancy Pelosi is halting it based on other spends. The Feds Bostic expects Congress to act quickly to replenish the program.

Fed Bostic

Atlanta Fed President Bostic addressed the importance of the matter today. He said it would not be good to lose small business because lending program ran out of funds. Given the seriousness of such he expects Congress to act quickly to replenish small business lending program

Bostic said would not be surprised if new stresses arise that cause further Fed action. He added looking for further market stresses, willing to do more with treasury back facilities if needed. He has a concern that all communities have access to funds through Fed municipal facility.

Perhaps a little wishful thinking however saying he is hopeful rebound in economy meets Fed lending will be repaid quickly and balance sheet will resolve itself. The forbearance of mortgages will put stress on mortgage servicers. He is having staff analyze when that might become unsustainable.

The SBA loan program of up to $10 million would transfer the money to grants. meaning not repayable so long as proceeds were used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made. The loan rate if not a grant is 1%.

The main features for small businesses are emergency grants and a forgivable loan program for companies with 500 or fewer employees. There are also changes to rules for expenses and deductions meant to make it easier for companies to keep employees on the payroll and stay open in the near-term. Emergency grants: The bill provides $10 billion for grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs. Forgivable loans:

There is $350 billion allocated for the Small Business Administration to provide loans of up to $10 million per business. Any portion of that loan used to maintain payroll, keep workers on the books or pay for rent, mortgage and existing debt could be forgiven, provided workers stay employed through the end of June. Relief for existing loans:

There is $17 billion to cover six months of payments for small businesses already using SBA loans.

Coronavirus care package

Source: SBA, Reuters

From The TradersCommunity News Desk

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