Dive Brief:

• Senate Republicans on Monday proposed creating a government-guaranteed, long-term loan initiative with almost $60 billion to benefit seasonal businesses and companies based in low-income communities.
• The plan, part of a larger coronavirus relief and stimulus package, would flag $190 billion in existing and new Paycheck Protection Program (PPP) funding through the end of the year. PPP, which is set to expire Aug. 8, had about $130 billion remaining Friday, according to the Small Business Administration (SBA).
• The Federal Reserve on Tuesday announced a three-month extension, through Dec. 31, for several of its lending facilities, including PPP and the Main Street Lending Program.

Dive Insight:

The seasonal and low-income-area business proposal would let the SBA lend as much as twice a borrower's annual revenue, up to $10 million, for as long as 20 years at 1% fixed interest, according to a summary of the plan seen by Bloomberg. Repayment would be deferred for two years.

Eligible businesses would have a headcount of 500 or less and have seen a 50% reduction or more in revenues in the first or second quarter of this year compared with last year.

"It provides them flexible, long-term working capital to help ensure that these most vulnerable and underserved small businesses don't go out of business because of the pandemic," Sen. Marco Rubio, R-FL, said on the Senate floor, according to Bloomberg.

The plan would also let companies with up to 300 employees and at least a 50% drop in revenue get a second PPP loan of as much as $2 million. The proposal also would set aside $25 billion for entities with 10 or fewer workers, as well as $10 billion for loans made by community lenders.

Sen. Susan Collins, R-ME, said the plan would give companies more flexibility to spend PPP funds on personal protective equipment (PPE). The Republican proposal would also simplify the forgiveness process for loans of less than $150,000.

"We have one foot in the pandemic and one foot in the recovery," Senate Majority Leader Mitch McConnell, R-KY, said Monday, according to American Banker. "The American people need more help. They need it to be comprehensive. And they need it to be carefully tailored to this crossroads. That is what this Senate majority has assembled."

A bill introduced last month by Democrats sought to extend PPP through the end of the year and allow second loans for companies with 100 employees or less. It would also set aside funding for the smallest companies and those in underserved and rural communities.