The U.S. economy probably will not need a third round of small business rescue loans backed by the federal government, Treasury Department spokeswoman Monica Crowley said Wednesday.
The U.S. government on Monday relaunched the small business lending facility known as the Paycheck Protection Program. The original $349 billion of funding authorized by Congress was quickly exhausted. Last week, Congress authorized an additional $310 billion.
The loans are aimed at businesses with less than 500 employees and are forgivable if borrowers avoid layoffs. The government guarantees repayment, making the loans nearly risk-free for banks.
Crowley said that the administration’s goal was to cover around half of the private sector workforce.
“We should be right around that target when the second tranche is exhausted,” Crowley said in an interview on Breitbart News Daily on SiriusXM’s Patriot channel.
As a result, it is unlikely that the administration will need to appeal to Congress for a third round of funding. Some critics have said that the economy could need almost twice the $660 billion of loans the first two tranches authorized.
Crowley said that around $2 billion in funds had been returned by businesses that should not have applied for the funds in the first place. Shake Shack and the L.A. Lakers are among those companies that initially borrowed under the program but decided to return the funding after a public outcry against larger businesses taking the funds while some small businesses were turned away. Returned funds can be re-lent to smaller borrowers.
Crowley said that the Treasury had issued new guidance about the criteria for the loans, including the “stringent certification process.” This is expected to curb use of the facility by companies that do not need the funding or have access to capital from public markets.
“The average loan is for $100,000 or less,” Crowley said, pointing out that this was lower than in the original tranche, an indication that more of the funds were getting out to small businesses.