Postal Service reaches agreement for $10B loan from Treasury ‘should the need arise’
The U.S. Postal Service (USPS) says it has reached an agreement on the terms of a $10 billion loan from the Department of Treasury, “should the need arise.”
The up to $10 billion loan authorized by the March CARES Act will allow USPS access to the money if it determines “it will not be able to fund operating expenses without borrowing money” because of the coronavirus pandemic, according to a Treasury Department release.
“While the USPS is able to fund its operating expenses without additional borrowing at this time, we are pleased to have reached an agreement on the material terms and conditions of a loan, should the need arise,” Treasury Secretary Steven Mnuchin said in a release.
The agreement comes after USPS cautioned earlier this year that it expected to run out of money by September without any financial assistance. Mnuchin had pushed for this money to be given in a loan if USPS made changes like price increases for shipping.
Postmaster General Louis DeJoy had instituted cost-cutting measures earlier this month. He said in a statement that the loan will assist in postponing “the approaching liquidity crisis.”
“The Postal Service, however, remains on an unsustainable path and we will continue to focus on improving operational efficiency and pursuing other reforms in order to put the Postal Service on a trajectory for long-term financial stability,” he said.
Critics of the cost-saving measures say they will slow down mailing, in a time when Americans are relying on the service more during the pandemic, including potentially for mail-in ballots for the presidential election.
This year, the USPS experienced an increase in e-commerce sales which seemed to allay the expected financial woes. Package deliveries increased 20 to 50 percent in April and 60 to 80 percent in May compared to those months last year, according to data obtained by The Washington Post.
President Trump had threatened earlier this year to prevent the USPS from receiving financial COVID-19 assistance if it did not increase its prices to cover gaps in its budget.