Well, that didn’t take long.
The Paycheck Protection Program (PPP) is already out of money.
Congress included $349 billion in the CARES Act to provide largely forgivable loans to small businesses devastated by the pandemic. Businesses rushed to get the loans, as banks struggled to meet the demand while complying with the SBA guidelines.
By midweek, the program had run dry and thousands of business owners were left empty handed. Meanwhile, Congress is arguing over replenishing the program.
Republican leaders are pushing a “clean” bill that puts another $250 billion toward the loans. Democrats, according to the New York Times, “have insisted on new restrictions to ensure that money flows to minority-owned businesses… (along with) more money for hospitals, food-stamp recipients and state and local governments whose tax receipts have plunged.”
Democratic Senator Joe Manchin is pushing for a compromise that includes a change in the formula to prioritize rural hospitals and healthcare providers. “We knew when we passed an 850-page bill a month ago there would be things that fell through the cracks. This is a perfect example,” he said.
Republican Senator Shelley Moore Capito tweeted, “This situation could have been completely avoided. Small businesses in America are in desperate need. We should not be playing politics and denying small businesses the help they need. Congress MUST fund #PPP.”
The National Federation of Independent Businesses is pleading with Congress to move on the legislation. “As this program operates on a first-come, first-served basis, further delays in appropriations will slow the forgivable loan approval process and lock out those business owners who are only recently eligible to apply, such as independent contractors and self-employed individuals,” NFIB said in a letter to Congress.
The nationwide shutdown, while necessary, has devastated the economy. It’s tough enough in the private sector to own and operate a business. Successful entrepreneurs make a profit, but that’s only what’s left over after every payroll, expense and tax is paid.
Now imagine what it’s like for businessmen and women who have either been ordered to close or been denied their normal flow of customers because of the pandemic. They must lay off or furlough employees while their balance sheet dives into the red and the bills keep coming.
The advantage of the PPP is that it enables businesses to keep paying those employees during the crisis, while also helping the businesses with their mortgages, rent and utilities.
Gil White, state director of the National Federation of Independent Businesses, said on Talkline yesterday that without more money in the loan program, many small businesses in West Virginia won’t make it.
President Trump and Governors are now beginning to talk about reopening the economy. However, without rapid agreement in Washington on additional money for the PPP, many small businesses here and across the country will have already closed their doors for good.