New funding package to pump billions of dollars into programs for small businesses
The Trump administration and Congress are reportedly close to inking a deal that will unleash $300 billion in aid for small businesses struggling with the economic impact of the COVID-19 pandemic.
The Lowdown: The package will replenish the Paycheck Protection Program (PPP), which ran out of its initial $349 billion allotment last week. The White House said negotiators were closing in on terms for the package and that a vote could come as early as this afternoon (Monday, April 20). Congress, which is currently in recess, will convene briefly today for procedural votes; Congressional leadership could add the PPP replenishment package to the docket. Otherwise, a vote may not come until Wednesday when House Democratic leadership is scheduling a series of votes. In either case, Democrats and Republicans are confident that they’ll clear a funding bill this week.
The Details: The PPP replenishment package includes $310 billion, plus $50 billion for the SBA’s economic injury program. Hospitals and health care facilities will receive $75 billion. Another $25 billion is going to COVID-19 testing, which is seen as vital to reopening the economy. Of the balance, small financial institutions and local banks will receive $60 billion to ensure money flows to minority and low-income communities, according to the Washington Post.
The Impact: Aiding business is seen as vital, as the COVID-19 pandemic and the associated mitigation measures have shuttered or diminished the operations of millions of businesses. The inability to operate is hurting revenue, causing a ripple effect through the economy by taking money out of budgets for payrolls, services, and IT investments.
Solution providers are also looking for government assistance. They see aid as crucial for the viability of their businesses. Without the aid flowing to small businesses, solution providers fear their customers will collapse under the economic stress.
Many companies operating in the channel say they need government help to offset cash-flow disruptions and maintain normal operations. In numerous channel community discussions and online forums, solution providers complain about the lack of clarity and transparency in PPP. While some solution providers report receiving aid, others say they have no idea where their applications stand.
Background: The Paycheck Protection Program and the Economic Injury Disaster program, both administered by the Small Business Administration, are the primary vehicles for economic relief from the COVID-19 pandemic. Under PPP, businesses can receive up to 2.5 times their average 2019 monthly payroll to cover salaries, utilities, and rent. Most of the loan is forgivable if the receiving businesses maintain their payrolls until June 30.
The initial funding of $349 billion ran out last week, just two weeks after the SBA opened the application process. The SBA says it processed 14 years’ worth of aid applications in 14 days. In that period, 1.6 million businesses received aid. While the SBA hasn’t said how many applications it received, published reports indicate there are 30 million small businesses in the United States alone.
The Buzz: “We want to make sure that it’s reaching all of America’s small businesses. And we also want to make sure that it’s operating in a community where our police and fire, our health care workers, our doctors, nurses, our teachers are being compensated and not fired,” said House Speaker Nancy Pelosi (D-Calif.) on ABC News. “And that’s why we’re asking for the additional funds in the package, as well as for hospitals so that we can do testing, testing, testing.”