Speaker of the House Nancy Pelosi hosted a virtual roundtable with small business owners and advocacy organizations Tuesday afternoon, as the federal government’s program to support businesses with fewer than 500 employees was on track to use up the roughly $ 640 billion that Congress has allocated to date.
The Paycheque Protection Program provides small businesses with low-interest loans to cover two months of pay and other expenses that can be canceled in proportion to the pre-crisis employment level maintained on June 30 . The loans are supported by the Small Business Administration, but launched by private banks, and the program was followed by accusations that the banks first served their largest and oldest customers, leaving the smallest businesses and the poorest without access to help.
Small Business Administration data shows that the average loan size fell to $ 79,000 after Congress authorized a second round of funding for the program late last month, down from $ 206,000 in the first.
However, if the issuance of new loans maintains the pace of last week, the SBA should exhaust all new funding by Friday, when it has issued about 5.6 million loans, which may not be enough to meet to the needs of the 30 million small businesses in activity. Across the country. A survey released Tuesday by the United States Chamber of Commerce found that 47% of small businesses, or 14 million businesses, believe a PPP loan is essential to keeping their businesses open.
“There is a clear need for continued financial support,” Neil Bradley, executive vice president and director of policy at the United States Chamber of Commerce, told MarketWatch.
Whether small businesses can expect more support of any kind remains an open question. Senate Majority Leader Mitch McConnell expressed mistrust of new spending measures after Congress has already allocated nearly $ 3 trillion, and he and the minority leader of the House, Kevin McCarthy, released a joint statement on Friday that they would not support another coronavirus bill unless it provides liability protection for companies hoping to operate in the midst of Coronavirus epidemic, a move Democrats have said they oppose.
Pelosi seems ready to organize his caucus around a new bill that defends democratic priorities, including a proposal by representative Pramila Jayapal of Washington that would authorize the Treasury department to reimburse employers 100% of their payroll and employee benefits of up to $ 100,000 per employee, as an incentive for all businesses, states and localities to maintain their pre-crisis employment levels. A similar proposal in the Senate was championed by Senator Mark Warner of Virginia and others.
Pelosi urged small business leaders to make their voices heard if they “believe the idea of Jayapal-Warner is good because the road from 3 million to 30 million is long”, referring to gap between PPP loans issued and the potential need of small businesses.
There were still glimmers of bipartisanship on Tuesday, with Democratic Senator Michael Bennett of Colorado and Republican Senator Todd Young of Indiana proposing a new initiative called the RESTART program to provide longer-term support for small businesses.
RESTART to seek to “provide funding to cover the next six months of pay, benefits and fixed operating expenses for businesses that received substantial income during the COVID-19 epidemic,” according to a press release. , which would respond to criticisms that the PPP allowance for two months of salary expenditure is insufficient to combat what has evolved into a longer-lasting crisis.
The loan would be canceled in proportion to the loss of income suffered by the company in 2020, the balance would be repayable over a period of seven years and would be accessible to all companies with up to 5,000 employees.