Elizabeth Macbride and I wrote an OpEd piece that was posted on CNBC this morning addressing what we believe to be significant shortcomings of the CARES Act and the SBA’s Payroll Protection Program (PPP). Specifically how the stimulus is failing to meet the needs of small businesses around America in this time of crisis. This is urgent and needs to be addressed as soon as possible. I’d encourage you to click through to read the full piece, but below I’ve outlined the key recommendations we make at the end of the OpEd:
1. Set up individual loan funds
Anticipating that the federal aid would roll out slowly, states, communities and foundations have set up their own loan funds, often with donations, community reinvestment act credits from local lenders and help from local economic development groups. There are more than 30 so far nationwide, such as this one in Louisville, Kentucky, that aims to put 0% interest loans into the bank accounts of businesses with fewer than 10 employees within a week. SBA funds could be disbursed to these loan funds, which have lines of communication to their own small business communities — and can act much faster than the federal bureaucracy.
“We are disappointed in the lack of broader inclusion of community loan funds in the PPP and are hopeful that we can find a way to be partners to reach all Americans and the businesses and nonprofits who are not easily reached by the larger institutions,” says Lisa Mensah, CEO of the Opportunity Finance Network, the association of community development financial institutions, which are involved in some of the new loan funds.
2. Urge big business to pay receivables faster
Big companies that market to small businesses and use their services are beginning to step up, by paying their receivables faster. Last week a coalition of tech companies that serve the small business market —Alignable, Fundbox, Gusto, Homebase, Womply, SmallBizDaily.com, Actual.Agency, Business.com and Small Business Edge — introduced an initiative called #paytoday to urge big businesses to pay faster.
Let’s encourage a national movement around this. It’s our respective civic duty as individuals and businesses to do everything we can do to support the small businesses in our communities.
3. Appoint a clear leader
Whatever interagency rivalry hampers the interpretation of the rules and implementation of the programs needs to stop. This is management 101. The mobilization needs a clear leader, who will be held accountable for making sure these billion-dollar programs run smoothly and transparently. President Donald Trump should appoint such a leader immediately to oversee these programs.
4. Provide more clarity
The PPP loan program needs immediate clarification and to be streamlined. That should be the first priority of the newly appointed Coronavirus Recovery Czar.
5. Expand the program
Additionally, the program itself needs to be expanded. The intent of the program is to save jobs and to provide a lifeline to businesses most affected by the COVID-19 economic crisis. However, the way it’s structured almost completely leaves out businesses such as restaurants, fitness facilities and other small businesses unable to operate in our current “shelter in place” society. Those businesses closed weeks ago and already laid off employees.
These businesses are unable to access key parts of the program related to loan forgiveness: For instance, the ability of loans to be forgiven based on future payroll obligations cannot be accessed if companies have already closed and laid people off and are unable to reopen quickly enough. These rules need to be addressed and updated to allow businesses such as these to receive the benefit of the program as they ultimately get up and running again as society emerges from their homes.