Critical Small Business Needs Ignored in McConnell Bill
The coronavirus pandemic presents an existential threat to small businesses — and critical problems have emerged in the Small Business Administration’s relief programs that are endangering the survival of Main Streets across America. But while Democrats want to fix these issues in the interim relief package to prevent these small businesses from going under permanently, Senator McConnell’s bill does nothing for them at all.
Main Street small businesses in underbanked communities and rural areas are being left behind by the Paycheck Protection Program. Democrats’ bill channels $60 billion of the Administration’s PPP funding request through community based financial institutions, which have a track record of lending to Main Street, rural, minority, women and veteran owned small businesses that are the lifeblood of American communities and essential to any recovery. McConnell’s bill only perpetuates the first-come, first-serve system that is threatening to leave underserved Main Street businesses hopelessly behind.
“After the launch of the Paycheck Protection Program, some businesses are just trying to find a lender that will consider their application.
“…several of the large banks curb the types of applications they’re willing to consider. Bank of America has limited the businesses that could apply to the program to those with existing checking and credit accounts... Others like Chase, TD Bank, and Capital One, are limiting the applications they’re accepting to customers who’ve opened some type of account at that bank before.
“This approach means that many small businesses could be shut out of the process by large, national lenders. If banks only serve their customers, then the very businesses that may need access to the PPP program most will be left out in the cold, no question,” Enhanced Capital Group CEO Michael Korengold told the Wall Street Journal. Minority-owned business are less likely to have existing accounts at these banks and could experience more obstacles in obtaining these loans as a result, the WSJ notes.
The SBA Disaster Loan program is $300 billion short, slashing loan size for desperate small businesses. Democrats’ bill refreshes this critical program, with a $50 billion investment that will leverage the $300 billion in disaster loans that America’s small businesses have applied for. McConnell’s bill does nothing to address this shortfall.
“Owners were supposed to be able to get up to $2 million. Now they’re being told the cap is $15,000 — if they can get any answers at all.
“…But in the face of the pandemic, the loan program is drowning in requests. Many applicants have waited weeks for approval, with little to no information about where they stand, and others are being told they’ll get a fraction of what they expected. The program is supposed to offer loans of up to $2 million, but many recent applicants said the S.B.A. help line had told them that loans would be capped at $15,000 per borrower. That was backed up by a message from the agency that one applicant shared with The New York Times.
The $10,000 SBA Disaster Grants are oversubscribed by 2 million applications, and SBA is cutting benefits for the smallest businesses. Democrats’ bill supplies a quick infusion of $15 billion to help meet the immense demand for these grants. McConnell’s bill does nothing to refill these funds desperately needed to tide over small businesses.
“If every applicant received the maximum $10,000 grant, the funding would cover around one million businesses. But more than three million applied for disaster loans last week alone, Joseph Amato, the director of the S.B.A.’s Nevada office, told attendees at a webinar on Monday. His comments were reported earlier by The Washington Post.
“In response to the demand, the S.B.A. appears to have also added an additional restriction on the grants: Dozens of business owners said they had been told that the grant, if they got it, would be limited to $1,000 per employee — meaning the smallest businesses could not receive the full amount.