Mnuchin: hard-hit businesses should get the next help
Treasury Secretary Steven Mnuchin told Congress that the Trump administration wants the next round of economic aid to focus on businesses like restaurants that have been hit hardest by the coronavirus crisis. (June 30th)
WASHINGTON – Small businesses struggling to weather the coronavirus crisis will have several more weeks to take advantage of a popular federal loan program that has already distributed $ 500 billion to keep Main Streets alive.
The House Wednesday followed head of the Senate Tuesday and voted to extend the Paycheque Protection Program until August 8. Created earlier this year as part of the CARES law to help the country respond to the fallout from the COVID-19 pandemic, the PPP expired on Tuesday.
The program still has around $ 130 billion to spend although lawmakers and the Trump administration are in talks fine-tune the PPP to reach hard-hit businesses such as restaurants and hotels that have struggled to use the financial aid.
The adoption of the extension came on the same day that House lawmakers attacked the Small Business Administration for another program designed to save family businesses in accordance with social distancing guidelines instituted after the coronavirus landed on the American coasts.
But as the COVID-19 pandemic started shutting down the economy this spring, with thousands of small businesses seeking bailouts under the federal government Economic Disaster Loan Program ran into a wall: few answers on their status; periods during which applications have not been accepted; changing regulations; hours of waiting on hold.
Then without warning, the Small Business Administration in trying to pump out its money pool further reduced the maximum EIDL loan. from $ 2 million to $ 150,000 – a change that many applicants never heard of until they received their money.
“Throughout the process, the SBA has shown a lack of understanding of the challenges facing small businesses related to COVID-19,” said House Small Business Committee Chair Nydia M. Velázquez, DN. Y. during an audition on the program Wednesday.
His concerns, directed to associate SBA administrator James Rivera as he sat in the courtroom, were echoed by Republicans and Democrats on the committee who shared stories of voter dissatisfaction.
Florida Republican Ross Spano criticized the agency for its poor communication.
“In my district, I have received literally hundreds of calls regarding the frustration of business owners with getting information, not having questions answered, not knowing the status of their requests,” he told Rivera. “We can do better and we have to do it frankly.”
Representative Angie Craig, D-Minn., Who sponsored the P3 extension bill that the House passed on Wednesday, described the management of the EIDl program as “absolutely terrible”.
“I have a lot of businesses in my district that, if this was the kind of level of customer service they provided, would go bankrupt three months ago, ”she told Rivera. “I have people in my district who applied and heard crickets for a month. No response from the EIDL program. “
Rivera acknowledged the critics.
“The past three months have obviously been a difficult road,” he said. “We clearly understand that we need to do a better job of communicating.”
But he also said the stumbles were due to setbacks associated with an unprecedented acceleration to deal with the pandemic fallout from an agency traditionally handling a much smaller volume of aid. The SBA’s disaster lending staff has grown from around 1,000 to over 7,000, and claims have already totaled 8 million, he said.
Adjustments to the program by Congress and a lack of funds at one point contributed to delays, he said.
The EIDL review has been overshadowed by the larger and more important Paycheque Protection Program which provided nearly $ 520 billion in forgivable loans to small businesses during the coronavirus crisis. After the initial ups and downs, the PPP was widely regarded as a success.
However, there are still barriers to accessibility, according to Fiverr.com, business consulting firm. A survey conducted by her found that 11% of business owners said they applied for the PPP loan but had not yet received the funds, while 17% said they tried to apply but found the process too complicated to apply. to end.
Unlike PPP, a brand new program that provides up to $ 10 million through private lenders primarily to keep workers on the payroll, loans under the already existing EIDL are processed only by the SBA and can be used for a wider range of business expenses.
EIDL has disbursed around $ 130 billion in grants and (mostly) loans and has an additional $ 200 billion until mid-December, Rivera said. Loan eligibility is often tied to a business’s credit rating and is expected to provide six months of working capital.
About 80% of loan applications are under 150,000, with an average award of $ 61,000, Rivera said. And the average loan processing time has dropped from 41 days to less than a week.
After Congress expanded EIDL eligibility to include farm businesses, the SBA stopped accepting loan applications from non-farm businesses for at least two weeks. Rivera said the agency needed time to “retool” its processing system because it had not processed agriculture-related loans for decades.
This did not satisfy Velázquez.
“You realize how many borrowers are calling our offices shouting because they needed help, but the portal (online) has been closed for them,” she told him.
The decision to cap loans at $ 150,000 also did not please many members.
“While this is likely to ensure that the maximum number of companies receive some sort of funding during this crisis, my constituents are rightly upset,” Rep. Pete Stauber, R-Minn told Rivera. “They feel they are being cheated on what they have been promised by our government.”