Enacted last week as part of an epidemic-triggered $ 2.3 trillion economic stimulus package, the program aims to keep small businesses on respiratory support for at least the next two months.
The term “small business,” however, took on new meaning when a 56-word provision was inserted into the 148,124-word bill that passed through Congress.
For the purposes of some small business loans, the term generally refers to businesses that employ fewer than 500 workers. But Congress and the Trump administration have agreed to include the major hotel and restaurant chains, as long as they employ fewer than 500 workers in a given location.
Now private equity firms, venture capital funds and other large investors are also looking for some of the action.
Some small restaurants fear that they will not be supported by well-connected business operations.
“Who needs it most desperately – the Big Mac or the Small-Fry? The management of The Eleanor restaurant in Washington wrote on Instagram last week.
Jared Bernstein, an economist at the Liberal-led Center for Budget and Policy Priorities, said big, well-oiled companies could reach the top of the line for first-come, first-served loans.
“At the end of the day, it will be very difficult to figure out how to help the smallest and most vulnerable businesses. We are in a tsunami here and some people will be swept away, ”said Bernstein.
Before Congress even managed to stimulate the economy, consultants advised clients to prepare applications for “forgivable” loans that can turn into grants if the money is used for payroll, rent, and more expenses.
“We advise you to consult your own preferred lender now,” public relations firm Berman and Company wrote to its customers on March 25, two days before President Trump signed the bill.
Restaurant and hotel owners and their employees, shaken by the closures, figured prominently on the list of concerns for policymakers when drafting the bill.
The restaurant industry lost $ 25 billion in sales and 3 million jobs in the first three weeks of March, according to the National Restaurant Association, a business group that represents food establishments of various sizes.
“Mom and Pop” family farms represent 90% of restaurants.
The chains of health clubs and beauty salons are also demanding a piece of the cake.
Private equity firms and investment partnerships also asked US Treasury Secretary Steven Mnuchin this week to be included.
“It shouldn’t matter if these companies are supported by corporate, pension or other investments,” said Drew Mahoney of the American Investment Council, which represents the industry.
Nearly 20 members of Congress also want startups supported by venture capitalists to participate in the program, arguing that they created 3 million jobs in 2019.
“We cannot let this terrible pandemic cause irreparable damage to our most innovative and dynamic businesses,” wrote the lawmaker, led by representative Anna Eshoo, a Democrat representing Silicon Valley in California.
But small businesses fear that they will be ousted by better-equipped competitors who have the resources to quickly apply. Without money, many could be forced to close their doors.
“It is a lifeline. The stakes are really high, ”said Shannon Meade, lobbyist for the National Restaurant Association.
Report by Richard Cowan; additional reports from David Lawder, Lucia Mutikani and Patricia Zengerle; written by Andy Sullivan and Dan Grebler
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