Still others are seeking a longer-term solution: There is emerging bipartisan support for new government-backed loans that would last much longer than lawmakers originally envisioned with the Paycheck Protection Program, which was designed to delay mass layoffs in the early days of the pandemic.

“We are still in crisis,” said Holly Wade, director of research and policy analysis for the National Federation of Independent Businesses, which represents small businesses. “Until we have better therapies and a vaccine, we’re not going to see a full recovery from afar.”

This concern is shared by the Federal Reserve, which warned Congress last week that small businesses may need more help even as the economy reopens in “alarming” circumstances.

How to further support small businesses is shaping up to be one of the key questions facing Congress as negotiations approach on what is expected to be another huge economic bailout in the coming weeks.

The Small Business Administration will stop approving government guaranteed loans after June 30, and a growing number of lenders have already stopped receiving applications as they try to clear their last queues. And lawmakers have paid more attention in recent weeks to how to make it easier for businesses to convert loans into grants – a key selling point for employers to accept loans and maintain the payroll.

But even critics of the way the PPP was implemented say more help for small businesses will be needed, and the program could once again be the vehicle through which Congress implements it. Still, they are preparing to push for greater restrictions on who can benefit from them, fearing that too much of the money has gone to businesses that don’t need it.

“Maybe that is exactly the vehicle,” said Sen. Ron Johnson (R-Wis.) In an interview. “But we can’t just put it back. … We really need to qualify these things and target them a lot better than we started with.

Early data on the state of small businesses paints a grim picture.

According to an analysis released by the National Bureau of Economic Research, the number of active business owners – including small business owners – fell 22% from February to April, the largest drop on record. Restaurants, hotels, construction and transport companies suffered sharp declines. The damage was even worse for African-American employers, which fell 41%, and Latinx businesses, which fell 32%.

The Fed told Congress in a June 12 report that a wide variety of data revealed “an alarming picture of the health of small businesses during the Covid-19 crisis.” While the PPP application rate suggests it has been “extremely valuable and timely”, the Fed said “some industries may face a continued need after the program expires.”

The appetite for help is overwhelming. Businesses used up the program’s initial $ 350 billion in funding and scrambled even harder to apply when Congress approved an additional $ 320 billion.

But in recent weeks, the volume of loan approvals has changed little. Business groups and lenders attribute it to the primarily demand-driven program under its current rules. The requirements for loans have not been achievable for many businesses, especially the limits on how much they can spend on non-salary expenses such as rent. It took Congress and the Trump administration almost two months after the program launched to relax those rules after an outcry.

Other factors also played a role. Firms without existing banking relationships were initially at a disadvantage in obtaining loans, and there were lingering concerns about the complicated process of converting loans into grants. And after it was revealed that big companies like Shake Shack had taken the help, the Trump administration discouraged candidates who already had sufficient financial resources. Treasury Secretary Steven Mnuchin said last week that companies had paid off about $ 12 billion in loans.

“What we have realized is that companies with less than 10 employees are always on the sidelines,” SBA administrator Jovita Carranza told Fox Business on Thursday. “One, because they were worried. Second, because some documents were a bit cumbersome. But in coordination with the Treasury, we streamlined the request. We streamlined the pardon request.”