Yahoo Finance Top Democrat on changing small business stimulus: ‘8 weeks is not going to be enough’
In the weeks ahead, Congress is set to negotiate another coronavirus response bill with next steps for the Paycheck Protection Program as one of the key elements of any deal.
The program, run by the Small Business Administration, was created when the CARES Act was signed into law in March and then given $310 billion in additional funding in April.
The latest data, as of May 7, shows that the second round is nearly 60% depleted. It’s “very, very popular,” said Sen. Ben Cardin Friday during an appearance on Yahoo Finance.
Cardin is the lead Democrat on the Senate’s Small Business Committee. He oversees the SBA and, alongside Republican colleague Marco Rubio of Florida, helped create the program.
During the interview Cardin telegraphed a range of ways the committee might change how the PPP works during the next go-around.
'Eight weeks is not going to be enough'
Cardin is pushing for changes to how the program actually works. “Eight weeks is not going to be enough help for a lot of small businesses,” he said about the current rules, which provide forgivable loans totaling approximately two months of payroll for any given business.
Many businesses have now been shut down for almost two months.
“The eight-week restriction needs to be looked at,” said Cardin, noting that for businesses “it's a tough period of time to get all of your spending in, considering that your businesses are not reopened.”
This week Cardin and his Republican counterpart, Marco Rubio of Florida, held a call with administration officials to discuss the program. According to a Rubio spokesperson, Treasury Secretary Steven Mnuchin “offered support for legislative action to change the eight-week time frame to better fit the existing economic and public health environment.”
Another Democratic idea is to essentially make an end run around the PPP. Oregon Sen. Ron Wyden, in another Yahoo Finance interview on Friday, outlined a proposal to “not put [small businesses] through the banking system from A to Z again.” His idea would automatically give money to the smallest businesses that meet certain criteria and can demonstrate how the crisis hurt them.
Cardin has also discussed making the loans more targeted and underlined that the changes he’s envisioning would apply to “those small businesses that are in the greatest need.”
On transparency: ‘we'll get that information’
Another key priority for Cardin is transparency. The SBA releases breakdowns of its loans by things like lender size, the number of approved loans, as well as the amount of money approved in total.
This week, Cardin introduced a bill with Senate Minority Leader Chuck Schumer to change that. They would mandate daily reports from the PPP and other relief programs. They would also require “the name of the entities and the loans or grant amounts” be released.
The bill was blocked but Cardin believes he will eventually prevail. “I also believe we'll get that information,” he said. It could be part of the next legislation but Cardin also hoping “it can be done voluntarily,” he said.
He has been having conversations with Mnuchin and SBA Administrator Jovita Carranza about getting that information out. “I think Secretary Mnuchin agrees with us,” Cardin said.
Rubio has also clashed with the SBA over transparency. He blocked Cardin’s effort, but said on the Senate floor that “something like this may be necessary” eventually.
Mnuchin tweeted this week that the SBA would now offer “daily end of day updates” on PPP loan activity. But so far the SBA hasn’t released the detailed information Democrats are asking for, like the name of every business that has received a loan.
.@SBAgov is now providing daily end of day updates on #PPPloans volume. #CARESAct #SmallBusiness https://t.co/2s0bJDHhbJ
— Steven Mnuchin (@stevenmnuchin1) May 6, 2020
Allied Progress, a left-leaning nonprofit consumer advocacy group, launched a site to list public companies that have received PPP loans, using public filings and news reports.
Neil Barofsky, the former inspector general for TARP in 2008, told Yahoo Finance it was “pretty unbelievable that the government hasn’t committed to making all the recipients transparent” within the PPP. He then, like Cardin, predicted that they would relent: “they almost have to.”
More funds (probably)
Another change that Cardin expects in any third round is more money for the program. A recent report noted that demand is cooling for the loans, but “a lot of businesses are in the queue trying to get that type of relief,” Cardin said, and so he expects it will run dry for a second time.
To date, the PPP has now given out well over half a trillion dollars. Rubio has also said “we might” need additional funds for the program.
“We don't have that answer today,” said Cardin of how much more, but “we do think, though, there will come a period of time when there will be no further funds available if we don't replenish.”
Ben Werschkul is a producer for Yahoo Finance in Washington, DC.
Read more:
Lawmakers get impatient with transparency of the Paycheck Protection Program
Consumer group launches website to track all the public companies that got PPP small business loans
Why some lawmakers want cannabis companies and casinos to be eligible for coronavirus loans
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