(Adds further comment, background)
WASHINGTON, April 16 (Reuters) - U.S. small businesses may need as much as $500 billion a month to fully ensure their survival through the widespread closures and disruptions slamming their revenue during the coronavirus crisis, Atlanta Federal Reserve bank President Raphael Bostic said Thursday.
That “baseline” figure derived from staff analysis, he said, would be a starting point for discussions about how to expand a $350 billion small business lending program that was exhausted in about two weeks.
“Using that as a benchmark might give us some guidance. ... It would not be good to lose them,” Bostic said of the country’s millions of businesses with fewer than 500 employees.
The Paycheck Protection Program for small business was one of the signature elements of the $2.2 trillion emergency package approved by Congress late last month to try to keep the economy intact until the coronavirus outbreak is controlled and stores and businesses can safely reopen. Small businesses are allowed to take out four-year loans, and any amounts used to pay workers or basic bills like rent are forgiven - in effect turning the loans into government grants.
The money has quickly run out. Some 1.6 million companies have had loans approved, but millions more may need or want them.
“It is my sense that there are lots of businesses that may have needed this support and did not get it and we need to make sure they get whatever support,” is needed to survive the crisis, he said, adding he expected Congress to move quickly to expand the program.
The Fed itself is backing the program by allowing banks to turn the loans over to the central bank, in effect allowing them to collect a processing fee and then quickly make room for other transactions. The Fed said today that “facility” is now open for business. (Reporting by Howard Schneider Editing by Chizu Nomiyama and Jonathan Oatis)