Lawmakers in Congress are debating a second COVID-19 relief bill, and with that, more funds for the Paycheck Protection Program. In Florida, small businesses have exhausted money from the program and are waiting for more aid.
Florida U.S. Senator Marco Rubio says the Paycheck Protection Program (PPP) was a success despite its initial hiccups.
"It is clear that the Paycheck Protection Program has been the most, single most effective part of the CARES Act that was passed and one of the most effective federal relief programs in modern history," Rubio says.
According to the U.S. Census Bureau, more than 70% of Florida businesses received PPP loans. The program covered eight weeks of employee payroll while lockdowns were in place. After the program was launched, it ran out of money in two weeks. It was later replenished in late April, and more businesses were able to opt-in. Rubio says this expansion allowed businesses of all sizes to get aid. Still, Maryland U.S. Senator Ben Cardin says more needs to be done to ensure businesses stay open.
"When we passed those in mid-March, we really thought that this pandemic would be behind us by this past summer. But that was not the case," Cardin says.
The eight week period the loan was supposed to cover has long passed. And lawmakers are still debating a second round of COVID relief. That discussion is stalling another round of PPP. Cardin says if lawmakers can come to an agreement, the PPP needs to be specifically aimed at protecting smaller businesses.
"We're going to have limited resources. We're not going to have as much as we would like to have. We're going to be dealing with a bridge aid package if we can get it done. It will hold us off for several months. We need, therefore, to recognize we can't do everything we want to do. And the hardest hit small businesses are the smaller small businesses. So, let us target the program to the smaller of the small businesses," Cardin says.
Large businesses and corporations have been criticized for taking out PPP loans, helping exhaust the initial rollout. But Douglas Holtz-Eakin with the American Action Forum in Washington says just because larger businesses got the loans doesn't mean the PPP failed.
"The whole point was to preserve employee's paychecks. Larger employers had more employees. That was a success in that moment. But going forward, it can be targeted to smaller firms, under 300 employees and the like," Holtz-Eakin says.
According to the U.S. Census Bureau, more than 50% of Florida businesses surveyed reported the pandemic negatively impacted them in late April and early March. In mid-June, that number dipped below 40%. And in October, it dropped below 30%. Tom Zernick works for First Home Bank, headquartered in St Petersburg.
"In the Tampa Bay area, 22% of small businesses operational in January are now gone," Zernick says.
That number comes from the World Economic Forum. About 23% of businesses in Miami are no longer open. That number is 18% for Jacksonville. Those numbers could have been higher if it were not for the PPP. Bill Herrle heads the National Federation of Independent Business in Florida. He says the state's business recovery is patchy.
"What we are experiencing is a major dislocation. We do have job growth in Florida. There are great opportunities out there for people who are willing to look for employment, perhaps in a different field. The industries that are flourishing include construction and manufacturing, and personal services that can be delivered safely within COVID practices," Herrle says.
Herrle's group is recommending lawmakers ensure businesses are experiencing a loss to qualify.
"We're recommending that they peg it at a 35% loss in order to qualify for the next slug of PPP money," Herrle says.
Herrle says it's easy to criticize the program in retrospect. But it was a success. Still, Zernick predicts lenders may be more reluctant than last time to dole out PPP loans.
"Lenders are slogging through 5.2 million forgiveness applications without clear guidance. And given the onerous process, borrowers are concerned they will face unexpected debt they can't afford. Unless Congress addresses these implementation issues, there will be many lenders unwilling to participate in a round two," Zernick says.
Many small businesses still haven't had their PPP loans forgiven, despite assurances that it would happen. More than 39,000 businesses in Florida received loans up to $150,000. And more than 40,000 businesses in the state received loans of more than $150,000.
