US treasury secretary Steven Mnuchin. Picture: MANDEL NGAN/AFP
US treasury secretary Steven Mnuchin. Picture: MANDEL NGAN/AFP

Washington  — The Trump administration on Tuesday asked Congress for an additional $250bn in emergency economic aid for small US businesses reeling from the coronavirus pandemic, as Senate majority leader Mitch McConnell pushed for passage as soon as Thursday.

In a posting on Twitter, treasury secretary Steven Mnuchin said he had consulted with congressional leaders on the need for the second round of funding.

If approved by Congress, the aid would add to the $349bn in loans to small businesses enacted on March 27 as part of a $2.3-trillion economic stimulus in response to the virus outbreak.

Shortly before Mnuchin's announcement, McConnell, a Republican, said in a statement: "It is quickly becoming clear that Congress will need to provide more funding or this crucial programme may run dry."

He added that he would work with Mnuchin and Senate Democratic leader Chuck Schumer on the initiative with the goal of winning Senate approval on Thursday.

It was not immediately clear whether the top two Democrats in Congress, Schumer and House of Representatives speaker Nancy Pelosi, would embrace this timetable as they have been pushing for a broader set of measures that would comprise a fourth coronavirus-response bill since early March.

Mnuchin in recent days has been hinting at the need for Washington to provide additional aid to small businesses on the heels of the historic $2.3-trillion economic stimulus programme.

Action this week by the Senate would highlight the depth of the crisis for small enterprises that have been shuttered because of the coronavirus outbreak.

McConnell's backing also marked a change in attitude. He warned in an April 1 interview with the Washington Post that Pelosi should not undertake a "premature" fourth stimulus bill related to the pandemic.

But just days into the opening of the small business loans, with coronavirus cases raging in many parts of the US, pressure built for more aid.

"There is a critical need to supplement the (loan) fund to ensure America’s more than 30-million small businesses will be able to access this critical lifeline," Senate Small Business Committee chairman Marco Rubio said in a statement.

Restaurants and hotels are among businesses hardest hit by the coronavirus outbreak, with many of them shuttered.

Former Federal Reserve chair Ben Bernanke said on Tuesday that the US economy could shrink 30% or more this quarter, and it could be a couple years before the economy regains its footing, former Federal Reserve Chair Ben Bernanke said on Tuesday.

"Overall, it could be a very bad year for the economy," Bernanke said. But he added that history suggests the recovery will be considerably shorter than that which followed the 2007/2009 financial crisis. 

The loan programme aims to encourage small enterprises to keep their employees on staff and to help them pay rent, mortgages, utilities and other overhead costs.

Pelosi on Monday consulted with rank-and-file members of her Democratic majority about House committees working on a bill that could top $1-trillion to augment the $2.3-trillion measure enacted in March.

With McConnell's announcement of a separate vote on small business aid, it was not yet clear whether the Democratic-controlled House would follow suit and quickly approve that as a standalone measure.

In an interview on CNN, Pelosi said there would have to be "certain considerations" ensuring the programme benefits all who qualify for additional money for small businesses to advance.

Some small restaurant operators have already voiced concerns that the loan programme was structured so that large companies and large franchisees could unfairly qualify for the help.