Small businesses are a major source of job creation in U.S. But with the coronavirus pandemic, thousands have had to close at least partially, and many are still in danger of closing for good.
Accordingly, Penn Quarter-based public policy org Economic Innovation Group (EIG) is leading a national coalition of business groups in pushing Congress to advance small business relief, including another round of Paycheck Protection Program (PPP) loans.
Launched in April as federal lawmakers sought to take action in the early days of the pandemic, PPP offered hundreds of billions of dollars in forgivable short-term loans to small businesses hurting from public health restrictions and a tightened economy. There was an immediate influx from companies, as funding was limited at first. Though Congress made more dollars available, the re-up hit an August deadline and is no longer available, even as billions remained. Since then, PPP’s future has been mentioned numerous times in negotiations for a new bill that could potentially provide relief in an array of areas, but Congress adjourned a couple times without passing a bill.
Now, with Congress once again nearing the end of its time in session without a deal in place, the push is once again on for leaders to come together.
In a letter directed to U.S. Reps. Nancy Pelosi and Kevin McCarthy and U.S. Sens. Mitch McConnell and Chuck Schumer, 26 organizations, including the U.S. Chamber of Commerce and U.S. Travel Association, asked for immediate relief in the form of a renewed PPP. The coalition also requested the creation of a zero-interest loan program that could support small businesses through ongoing economy recovery.
“Small businesses are in the middle of a prolonged and unprecedented crisis — one that will not truly begin to subside until the public health crisis is resolved through a widely-available vaccine,” the letter states. “Congress must act quickly to enact relief to prevent further devastation to the small business sector.”
John Lettieri, EIG’s President and CEO, told Technical.ly that EIG has been leading business relief coalition efforts since March, when the pandemic’s impact was first felt on a nationwide scale. For PPP recipients, this letter aims to “renew the call we’ve been making to give those same borrowers additional life.”
“Congress allowed it to expire with over $100 billion of resources still left in the bank months ago and has provided no successor to the program — which is unconscionable on its own,” he said.
But especially now, with COVID-19 cases rising, there is expected to be another “pullback in consumer behavior,” he said. “This is all happening without any relief to blunt the severity of the crisis.”
The group is also arguing that an eventual economic recovery will come easier if companies can hang on until a vaccine arrives and people return to their normal consumption habits, as opposed to businesses dying before we even get there.
“This is a down payment on a stronger recovery that can be made now: preserve businesses, preserve jobs,” Lettieri said.
While PPP is a stopgap offering a few more weeks of relief, the second part of the letter focuses on months-long relief.
“Right now, PPP is the best thing that’s going to happen in the lame duck Congress,” Lettieri said. But, he added, “it should have been a bridge to a longer-term relief [program]” to match the scale of the crisis all along.
Low- or zero-interest loans with long maturity would allow businesses to support paychecks, but also pivots for sustainability and operating costs, such as capital purchases or paying down debt, Lettieri said. EIG outlined a plan for a lending program of this type back in March. Such loans would offer the means for businesses that had been operating at 100% capacity in February 2020 and then, say, 50% in September 2020 to lower their fixed costs.
In other words: PPP is urgent now, but keeping an eye on what’s next is just as important so businesses can transition “from crisis mode to recovery mode,” Lettieri said.
So, can it happen? EIG’s head is “cautiously optimistic” that a new round of PPP funding could pass before Congress adjourns for the year.
Small business support is “the area of the strongest and most bipartisan agreement,” he said. However, that’s been true since the last round of PPP funding expired, and it’s gone four months without a successor. “We’ve seen that that’s not enough to actually move the needle.”
“I’m frankly shocked that it hasn’t happened already,” he said.-30-