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Editorial

Small businesses need more federal help

Posted

Let’s not mince words: The federal government’s Paycheck Protection Program, which was supposed to hurry loans to small businesses so they can make payroll and stay afloat, has been troubled from the start.

With $349 billion in its coffers, the program, administered by the Small Business Administration, ran out of money last Thursday, leaving tens of millions of employers in the lurch, wondering whether they will be able to meet payroll at a time when so many small businesses are limping along because of the coronavirus pandemic.

Small businesses are the lifeblood of Main Street America, employing 48 percent of our national workforce. In total, there are 28 million small businesses across the U.S., according to Forbes. They desperately need — and deserve — better, particularly in the hardest-hit regions like the Northeast.

According to a CBS News analysis of SBA and Centers for Disease Control and Prevention data, New York, which has by far the greatest number of cases of Covid-19 of any state, was fourth on the list of states to receive PPP loans. Meanwhile, businesses in Texas received more such loans than any other state, even though the Lone Star State has the 10th-largest Covid-19 caseload in the U.S.

    Apparently, Texas processed loans faster than New York, as the money went from the federal government to banks on a first-come, first-served basis, creating a race for funding. But that was unfair, because in places where need was greatest, like New York, businesses were struggling most to run their daily operations, and so were hamstrung in their ability to file for loans.

       The federal government should have set a date by which all loan applications were due, and then divided the money thereafter based on need.

    At the same time, some very big businesses received loans under the program. The owner of the Ruth’s Chris Steak House chain nabbed a $20 million loan, despite having more than 5,000 employees and $468 million in revenue last year. The PPP was supposed to have been limited to businesses with fewer than 500 employees, but Congress included an exception for hotels and restaurants.

    Most big-name chains did not apply for PPP loans, but others, including Potbelly, Kura Sushi and Shake Shack, did. (Shake Shack announced Sunday night that it would return its $10 million loan, citing confusion over the program’s regulations and saying that other businesses needed the money more than it did.)

    There were other problems with the program. Big banks, for example, lent money to their own customers first, and then to others. Many required borrowers to already have an established line of credit with the bank to receive a PPP loan. The thing is, this was a federal government program, and no loan applicant should have received preferential treatment.

    At press time, Congress was negotiating a $310 billion extension of the program, which would bring the total expenditure to $649 billion. One Forbes analysis, however, estimated the PPP really needs as much as $850 billion to fully fund all of the small businesses now in dire need.

    We commend Congress for making money available to small businesses quickly.  Sadly, however, the program has become another of many political footballs amid the coronavirus crisis. What’s lacking is national leadership. President Trump and Congress should be united in their desire to aid small businesses — now, not later.

    If the federal government doesn’t act fast, with one voice, our downtowns could soon become ghost towns, and that would be terrible for us all.