ADVERTISEMENT

White House Sends Aides to Beleaguered Small Business Agency

White House Sends Aides to Beleaguered Small Business Agency

(Bloomberg) -- The White House is dispatching staff to the Small Business Administration as the agency struggles with a flood of requests for financial aid to cope with the coronavirus outbreak, according to people familiar with the matter.

President Donald Trump’s daughter and senior adviser Ivanka Trump is sending one aide, as is the National Economic Council and the White House communications office, one of the people said.

Other staff from the Office of Economic Initiatives, the NEC, and the Office of Science and Technology Policy have been working with SBA and Treasury Department since before the coronavirus stimulus package was passed.

The SBA is dealing with unprecedented demand for loans historically distributed after small regional droughts or other natural disasters. So many people have tried to access the Economic Injury Disaster Loan program that SBA’s website has failed repeatedly in recent days, Bill Koontz, an SBA spokesman in California, said late last week.

Additionally, the SBA is on its third administrator under Trump -- Jovita Carranza, a former top adviser to Treasury Secretary Steven Mnuchin, has been in the job for almost three months.

New Program

Carranza, a top bundler of donations for Trump’s 2016 campaign, has a long-standing relationship with Ivanka Trump. The president’s daughter has fashioned a White House portfolio that includes workforce training and support for small businesses.

Even as it’s inundated with disaster loan applications, the SBA and the Treasury Department are hammering out details of a new $350 billion loan system included in the $2 trillion stimulus the president signed Friday called the Paycheck Protection Program. The private lenders that are expected to extend loans under the program are still waiting on details of how it will work.

“The White House, as well as OMB and Treasury, have been working with SBA for weeks on preparations for when the relief bill was passed and the Trump administration could begin actively assisting those requesting assistance quickly,” Judd Deere, a White House spokesman, said in an e-mail.

The new program is supposed to provide loans of up to $10 million per firm at a 0.5% interest rate, and companies may have the debt written off by retaining employees or rehiring employees already let go, among other terms. Mnuchin said in a statement Tuesday that the administration expects to have the new loans available by April 3.

Senior administration officials who briefed reporters on the new program on condition of anonymity said the government is prepared to ask for more money from Congress for the loans, if necessary. Thousands of lenders are expected to participate in the program, the officials said.

‘Speed’ the Word

“Speed is the operative word; applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans,” Carranza said in the same statement.

Congress appropriated an extra $675 million under the new law for SBA salaries and expenses to implement the new loan program, above the agency’s $1 billion fiscal 2019 budget.

The SBA’s historic disaster loans offer as much as $2 million to small businesses and an interest rate of 3.75%, and the SBA’s goal has been to make a decision on a loan within three weeks of getting an application, with funding to begin no more than five days later, Koontz said.

However, he acknowledged that many small businesses have eschewed the disaster loan program in the past because they haven’t wanted to take on additional debt in a time of crisis, Koontz said.

Also, firms that take loans from the Small Business Administration are ineligible for another program in the stimulus that provides up to a $5,000 tax credit if they retain workers during the downturn.

©2020 Bloomberg L.P.