Ready. Set. Go. Small Businesses And The Race For Round 2 PPP Funds
Small businesses may finally be able to exhale that very deep, conspicuous breath that they have been holding in collective unison for the past week—but they may not want to get too comfortable just yet. Senate Republicans and Democrats reached a deal on Tuesday to approve a bill that provides an additional $484 billion of coronavirus-relief funding, including an additional $310 billion for the government-backed Paycheck Protection Program (“PPP”). The bill, which passed by unanimous consent in the Senate, has now been sent to the House of Representatives, where it is expected to pass as early as Thursday. If so, the race to receive PPP funds will be back on—big time. But don’t be surprised if this leg lasts only a few days.
Small businesses struggling to stay afloat have been following the PPP developments with bated breath. The rollout and administration of the PPP—a forgivable loan program that is at the center of the CARES Act, a historic $2 trillion economic relief package—has come under fire in recent days amidst allegations that some banks engaged in self-interested and preferential loan processing, as well as concerns about unfair treatment of sole proprietors and public backlash over some fairly sizeable loans to a few not-so-small companies that probably test the boundaries of the program’s purpose.
The bill does not appear to directly address any of these alleged shortcomings, although it would set aside $60 billion of the funding specifically for smaller lending institutions like credit unions and community banks—a move that may help mom-and-pop businesses that found themselves crowded out in round 1. In its current form, however, it is largely a pure appropriations bill, doling out funding to loan programs without changing their basic structure or adding accountability measures. Nonetheless, the stakes for getting this right remain high. There have been indications that there will not be a round 3 of PPP funding. Small businesses account for 99.9% of U.S. businesses and nearly half of the nation’s workforce. They are not merely the backbone of an economy. They are quintessentially American—pure and simple. From their role as an incubator and developer of technologies to their ability to adapt, take needed risks, and even to fail without systemic consequences, small businesses are an outgrowth of several fundamental social and economic systems that have long defined the ideal that is America. Read the full article on Forbes here. Article by Jason B. Freeman,