Let’s use the PPP to help our small businesses
By Ben Bright May 24, 2020
The federal government’s Payroll Protection Program (PPP) has become a lifeline for businesses struggling to deal with the COVID-19 crisis. The $670 billion program was created to help businesses remain open, keep their workers employed, and cover some overhead costs by providing forgivable loans. Small businesses (defined by the federal government as having 500 employees or less) that spend 75% of their loans on payroll expenses would have their PPP loans forgiven with the intent of allowing businesses to survive the COVID-19 shutdown and keep people employed and, hopefully, off the unemployment rolls.
Many “small businesses” such as the Shake Shack burger chain, Ruth’s Chris Steakhouse, and even the NBA’s Los Angeles Lakers were able to find loopholes in the first PPP bill passed by Congress and apply for loans intended for our small businesses. Just these three examples received $35 million in PPP loans while many legitimate small businesses were shut out. Public pressure forced these companies to return this taxpayer money, but it made clear that the money intended to help our true small business owners stay in business was often going to large companies, or even publicly traded companies that had other revenue streams besides relying on a federal bailout.
The Democratic Party in Congress, in an attempt to fix this mistake before a second round of PPP funding was approved, held up passage of the second bill until over $60 billion was specifically set aside for smaller banks and credit unions who work with mom and pop businesses on Main Street USA. Those businesses, frequently owned by families, minorities, and veterans, often found themselves passed over by larger banks who chose to work with bigger businesses with more established credit.
Democrats knew that without funding specifically for these communities, Main Street as we know it would cease to exist. Despite cries from our colleagues across the aisle that they were holding up critical funding and, at least initially, taking a hit in the court of public opinion, Democrats fought for the “little guy” and won.
After several days of intense debate, the second round of funding was passed with $60 billion set aside for banks to work with true small businesses. Many businesses who struggled to get a loan after the first round of legislation could now gain access to the program and keep their businesses in operation.
We should be proud of Democrats for standing up for the barber shops, delis, nail salons, corner grocers, music shops, boutiques and other establishments that contribute so much to the quality of life in our towns. I’m encouraged that they are still looking for solutions to help us weather this terrible coronavirus storm, and positive results have already come from the changes that Democrats fought for during the second round of funding. The average loan amount dropped from around $200,000 to around $70,000, showing that smaller businesses were now able to take advantage of the PPP.
Democrats will continue to work to offer viable alternatives and promote programs that will further help America’s Main Streets. Some Democrats in Congress, such as Sen. Ron Wyden of Oregon, are proposing to use the PPP for direct cash payments of up to $75,000 to small businesses with fewer than 50 employees. Democratic Sen. Ben Cardin of Maryland has also proposed extending or revising the eight-week period small businesses can spend PPP money to more closely align with the needs of small business owners. These plans, and others like them, will provide true small businesses with a direct cash injection to stay open and pay employees, not another loan that will add to their existing debt.
During this discussion we should also encourage Congress to revise the PPP program to allow small businesses flexibility in using their aid. For instance, restaurants cannot use PPP loans to pay employees as they are closed due to social distancing measures recommended by the Centers for Disease Control & Prevention. They should be allowed to delay use of PPP funds until they reopen, are preparing to reopen, or are responding to customer demand. Also, businesses should be given the option to use the PPP to call employees back to work when the small business owner determines they are ready to do so based on established health guidelines.
There is no question that the PPP has been necessary to allow businesses to remain open and keep employees working. When Wall Street found a way to detour funding away from Main Street, Democrats fought to steer that money back to where it is most needed. Now we need Congress to revise the PPP to provide more resources, flexibility, and time to truly help our small business owners and their employees survive this crisis and, more importantly, thrive beyond it.
Ben Bright is chairman of the Washington County Democratic Committee.
