Congress created and the Trump administration implemented a new $350 billion program for America’s small businesses in a matter of weeks. That is warp speed by Washington standards.
As one of several federal initiatives to combat the economic toll of the coronavirus, the Paycheck Protection Program (PPP) provides federally guaranteed small businesses loans that can be forgiven if recipients follow certain guidelines and keep their employees on the payroll for the duration of the eight week loan. And mirroring its speedy creation, this program has also run out of funds at a blistering pace.
Thousands of Maine small businesses, including the Bangor Daily News, have already received loans through this program. Congress should quickly add more funding to the program so that other businesses can access these loans during the economic upheaval created by COVID-19.
“I am absolutely delighted that the program is making such a difference here in the state of Maine,” Sen. Susan Collins, who co-authored the program, told the BDN in an interview on Friday. “And until we ran out of money, we were able to shape a program that has provided forgivable loans to 16,500 small maine employers and a few non-profits as well.”
According to Collins’ office, those loans to roughly one out of every 10 Maine small businesses have totaled over $2.2 billion dollars in the state.
“The fact that we’ve run out of money within two weeks time shows how strong the demand for a program of this type is,” Collins said. “And my whole goal from the beginning was to help small businesses that were experiencing a severe cash flow problem, through no fault of their own, keep connected with their employees…”
The quick creation and implementation of a program this size is no small feat, but things created in a rush usually have flaws, and the Paycheck Protection Program is no different.
There were problems getting the program off the ground, with shifting federal guidance and some issues around the closing of loans. Some businesses owners reported trouble accessing loans if they didn’t have existing accounts or lines of credit with approved lenders.
Even as a champion of the program, Collins sees room for some improvement. She acknowledges some “glitches,” particularly in its early stages. She credited Maine community banks, credit unions and TD Bank for “stepping up to the plate” to provide loans through the program, while noting that some larger banks “did not do as good of a job.”
Some Democratic lawmakers, including Reps. Chellie Pingree and Jared Golden, have called for changes to improve the program. Some of those proposals overlap with adjustments that Collins supports. She specifically would like to ensure that community development financial institutions are eligible to participate in the program, and supports extending the program’s June 30 application deadline by a month to help seasonal businesses.
There doesn’t seem to be much disagreement from Republicans or Democrats that the program should be replenished, and there’s even agreement on some needed changes. But there is an ongoing stalemate on whether to move forward solely with PPP funding, or include it as part of another large coronavirus funding package.
Senate Republicans have been trying to get unanimous consent for an additional $250 billion in Paycheck Protection funding. Senate Democrats have resisted, not in opposition to the program, but because they see other funding needs to address as well. It feels a lot like deja vu, as the two caucuses faced a similar disagreement in March before Congress and the White House reached a deal on the Coronavirus Aide, Relief and Economic Security (CARES) Act.
“Congress should absolutely refresh the PPP funding and that’s in the works. … but the Paycheck Protection Program is not the only one that needs additional funding,” Sen. Angus King said in a statement to the BDN on Friday. He too thinks more should be done to involve smaller community lenders in the program. “I understand the need to move with urgency — but getting something done quickly and incompletely isn’t the right way to face this crisis.”
King said that the additional CARES Act negotiations resulted in improvements like added unemployment benefits, money for hospitals, funding for programs like heating assistance, and support for states.
“That should be the model here — we need to come together and get this right not only for small businesses, but for medical professionals and hospitals and small community lenders and states. We will get through this, together — so let’s make sure we’re staying together, not leaving anyone behind.”
King is not wrong that the additional time spent on the CARES Act resulted in a better final product. And small businesses are not the only group in desperate need of more assistance right now. The projected losses in state revenue here in Maine, for example, are staggering.
Collins pointed to the complications of needing unanimous consent to pass legislation right now while much of Congress is not in Washington. She is worried “if we open up a whole lot of other programs that have not yet run out of money, that we will end up sinking the much needed replenishment for the [Paycheck Protection Program].”
“It’s not that I’m opposed to looking at additional funding,” she added, citing more funding for hospitals and health care providers as something she would “very likely” support.
To us, the incredible demand for these PPP loans says more about the nationwide desperation and hurt on Main Street than it does about the ultimate effectiveness of the program. But the current demand is undeniable, as is the need to provide more funding.
The Paycheck Protection Program is an imperfect tool, and not the only one in the federal government’s toolbox right now. The SBA’s Economic Injury Disaster Loan Program has also been drained. Congress should sharpen both of these tools and put more more money into them — and should waste little time doing so.