The Main Street Alliance, a national network of small business coalitions, recently released a statement regarding the April 21, 2020, Senate passage of the COVID-19 “Phase 3.5” bill. The aid package will prioritize $484 billion in funding for small businesses, hospitals, and coronavirus testing programs.
“For small business owners facing increasingly dire circumstances, additional funding for the existing Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) are necessary but not nearly sufficient,” said Amanda Ballantyne, executive director of the Main Street Alliance. “The serious design flaws of the PPP will not be solved by throwing more money at these programs. Even the new inclusion of Community Development Financial Institutions and other dedicated funding for smaller lending institutions to meet the needs of minority-owned, unbanked and rural businesses around the country will not go far enough to secure our small business economy.
“Changes that must be made to make this program more effective include: 1) adjusting program to meet a longer recovery horizon; 2) expanding percent of loan eligible for non-payroll expenses; 3) expand list of eligible expenses, including allowing use for capital costs as owners adapt businesses recovery; 4) monitor and address equity in loan distribution by all lending institutions; and, 5) adding a grant program for businesses with fewer than 50 employees.
“The economic horizon remains far too uncertain for the majority of small business owners to take on substantial debt in the form of large loans. This fundamental flaw in the program must be addressed along with provisions that exclude key sectors. New businesses who have yet to turn a profit, as well as the stringent restrictions on those with criminal records have cut out entire entrepreneurial groups, particularly affecting minority business owners.
“This package should be a bridge to a more comprehensive program that addresses what will be an ongoing economic crisis until there is a vaccine. Calls to open the economy are premature and will only contribute to more pain in the long run. Small businesses need direct support to weather this storm, especially beyond the 8 week timeline of the PPP loan. We must now turn our attention from triage to programs that will put small businesses on a path to economic recovery.”
For more information, visit www.mainstreetalliance.org. Details regarding U.S. Small Business Administration COVID-19 disaster assistance programs are available at www.sba.gov/disaster-assistance/coronavirus-covid-19#main-content.