The federal government’s $670 billion program to aid small businesses will come under a spotlight when Congress rolls back into action this week, with many lawmakers planning to target what they say are shortcomings in the program and pitching their ideas for supporting small businesses.
Proposals include extending the number of weeks that small businesses can spend money from the government’s forgivable loans under the Paycheck Protection Program and allowing businesses to use more of the funds for overhead costs.
Some lawmakers want to create new funding vehicles, including allocating aid to local governments to disburse as they see fit amid the coronavirus pandemic.
“What I know now for sure is Congress has to do more to promote the agenda of the smallest of the small businesses in the next coronavirus package,” said Sen. Ron Wyden (D-Ore.).
Wyden said the smallest businesses have struggled to access loans through the PPP. He has proposed direct cash payments equal to 30 percent of gross receipts, up to $75,000, to firms with $1 million or less in gross receipts and 50 or fewer employees.
The Senate returns to Washington this week, while the House delayed its return date due to health concerns over the coronavirus pandemic.
Business groups say the PPP, which provides forgivable loans to small businesses, is flawed. They are calling for measures that would ease the program’s mandate that employers maintain payroll and provide more generous forgiveness terms.
“This is a much larger and more systemic crisis than PPP was designed for,” said John Lettieri, chief executive of the Economic Innovation Group, a bipartisan think tank. “It needs to be a broader, more flexible program and a longer-term program to help the business meet its entire range of costs and challenges,” he added.
PPP borrowers must spend 75 percent of their loans on payroll expenses to have them fully forgiven, which is proving a challenge for small businesses that are still navigating state-mandated closures or have funding needs beyond employee pay.
Another PPP limitation, advocates say, is that forgiveness applies to eligible expenses—including payroll and certain overhead costs—during an eight-week period that starts once the loan is made. With social-distancing measures, staffing up to pre-pandemic levels in eight weeks is not feasible.
The Small Business & Entrepreneurship Council has suggested the window of time allowed for loan forgiveness be expanded at least 24 weeks; the Economic Innovation Group has called for 20 weeks.
Looking ahead, other lawmakers have issued proposals that envision small-business aid outside the PPP’s bounds.
Sens. Steve Daines (R-Mont.) and Cory Booker (D-N.J.), for example, crafted a measure that would complement PPP by sending $50 billion to cities, counties and states for creating and expanding local coronavirus relief funds that could offer small businesses financing options such as grants and loans.
The PPP’s first $350 billion appropriation was quickly exhausted, and businesses have already snapped up $175 billion of the additional $320 billion that lawmakers provided, raising questions about whether the program can meet small-business demand.
Treasury Secretary Steven Mnuchin has said he doesn’t expect the program to receive an additional round of funding. Larry Kudlow, President Trump’s top economic adviser, said Sunday on CNN he wouldn’t rule out the possibility of allocating more money to PPP, but that the administration wants to focus on other measures, such as a payroll tax holiday for workers.
Some lawmakers have called for wage subsidies in the next wave of relief. Such aid could offer a lifeline to small firms. Nearly 50 percent of small businesses had a cash buffer of less than 15 days, according to research from the JPMorgan Chase Institute.
Source: Wall Street Journal