Small businesses owners say program Senator Collins authored was too slow and too rigid to help them

 

While Senator Susan Collins is airing campaign ads boasting that she “wrote the Paycheck Protection Program,” more than 100,000 small businesses have had to permanently close since March of this year and business owners are saying that they haven’t received the support they need from the PPP. When Senator Collins had the chance to close loopholes and fix the problems with the PPP, she fought for more of the same benefits for her corporate backers instead of addressing issues that small business owners have been reporting for weeks. 

 

Small business owners in Maine and across the country have reported “mind-boggling” problems with the PPP. They report that the program is too slow, too short-term, and includes limitations that don’t fit with how many businesses are adapting to the coronavirus crisis. According to one restaurant industry representative, the PPP “isn’t really working,” and economic advocates warn that rural areas will be among the hardest hit.

 

While small businesses are struggling to get by and shutting down, the PPP has doled out more than $1 billion to large publicly traded companies. Big corporations like the LA Lakers and billionaire-backed think tanks like the Aspen Institute have been able to get millions through the program as many small businesses have been forced to make the agonizing decision to shut down.

 

“The Paycheck Protection Program has not done enough to support small businesses in Maine,” said Maine Democratic Party Chair Kathleen Marra. “Senator Collins could have gotten to work to fix this poorly designed mess, but instead she decided to start airing campaign ads taking a victory lap for writing the program that is letting our small business owners down. Mainers deserve better.”

 

The Washington Post: Small business used to define America’s economy. The pandemic could change that forever.

 

By Heather Long

May 12, 2020

 

Key Points: 

 

  • Already, economists project that more than 100,000 small businesses have shut permanently since the pandemic escalated in March, according to a study by researchers at the University of Illinois, Harvard Business School, Harvard University and the University of Chicago. Their latest data suggests at least 2 percent of small businesses are gone, according to a survey conducted May 9 to 11.

 

  • The carnage has been even higher in the restaurant industry, where 3 percent of restaurant operators have gone out of business, according to the National Restaurant Association.

 

  • The result is likely to further shift the balance of power — and jobs — toward big businesses that have a better chance of surviving the uncertain year ahead by borrowing money or drawing on large cash reserves. Emergency actions by the Federal Reserve, backed by the Treasury, have made borrowing money almost free for large companies.

 

  • While 4.2 million businesses have received emergency loans from the Small Business Administration, it’s a fraction of the 30 million small firms in the nation. Many small-business owners say Congress’ financial rescue isn’t designed well to help very small businesses, known as micro firms, that have large overhead costs such as rent.

 

  • Losing small businesses often creates a ripple effect in communities, especially smaller towns where little shops and restaurants remain the lifeblood of Main Street. These business owners often depend on each other, meaning as some shutter forever, it can trigger more to follow.

 

  • “This is culturally devastating for communities. Small businesses really help provide communities with a sense of identity and place,” said Patrice Frey, president of the National Main Street Center, which advocates for restoring downtown hubs. “It’s very difficult to imagine how these businesses are going to be replaced easily, especially in more rural and distressed areas.”

 

  • Congress approved more than $700 billion in relief for small businesses, mostly in the form of Paycheck Protection Program loans and grants. The money comes from the Small Business Administration, although business owners apply for it through their local bank.

 

  • Another big complaint is that small businesses have to use three-quarters of the PPP money on payroll in order for it to become a grant that does not have to be repaid. Congress designed the PPP program that way to help save jobs, but it is causing problems when rent or other expenses represent a larger share of a company’s obligations, compared with payroll.

 

  • “What we hear over and over again is the federal stimulus isn’t really working for the restaurant industry,” said John Barker, president of the Ohio Restaurant Association. He’s urging Congress to build in “at least some flexibility” on how and when the grant money can be used.

 

  • As business owners debate whether to take PPP money, some are opting to reinvent their business model instead, often by doing more online and reducing staff costs.

 

  • Another issue with the PPP loan is that it covers only eight weeks of expenses, and the money must be used as soon as the business owner starts receiving it. That’s tough for restaurants and other businesses that are still closed or operating with a skeleton crew for takeout. They do not need all of their workers.

 

  • “If restaurants are only allowed to open at half capacity, that is a nail in the coffin right there,” said Justin Barrett, the chef and owner of Piecemeal Pies in White River Junction, Vt. “Consecutive rounds of PPP should be considered for small businesses until there is a vaccine."


 

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