The Paycheck Protection Program was a sound first step by Congress in the spring to save America’s small businesses from an impending economic catastrophe brought on by COVID-19. Without PPP, a significant number of small businesses in my state’s larger cities would have gone under, for no reason of their own.
But COVID-19 did not disappear eight weeks after PPP was in effect. Congress’ decision to extend the PPP covered period to 24 weeks was helpful — but even then, there is still no solution or forecasting on when this virus will dissipate. It’s critical for Congress to do the next right thing to get help to America’s job creators. Here are four easy solutions to enact quickly:
First, the forgiveness application for small PPP loans of less than $150,000 should be substantially simplified. These loans account for 86 percent of the total PPP loans administered and represent America’s mom-and-pop businesses, entrepreneurs and innovators who are running lean operations and are most intricately tied into their communities.
Until Congress acts, we coalesced in the private sector to make the PPP forgiveness application less cumbersome and easier to understand by launching www.PPP.Bank.
This website is free, collects zero data and offers a forgiveness calculator and self-guided, digitized application. The U.S. Small Business Administration recently recognized PPP.Bank for our effort to make the federal government’s application less intimidating. Even then, this is a band-aid for a more urgent solution of simplified forgiveness so that small businesses can keep their focus on moving forward.
Next, the SBA’s Economic Injury Disaster Loan program needs to be immediately funded and its maximum loan limit restored. Principal and interest payments should be deferred for two years to allow small businesses to recover without crippling debt service.
EIDL’s 30-year amortization alleviates some of the burden on a struggling small business’s long-term cash flow. The SBA’s unceremonious decrease of the maximum from $2 million to $150,000 put many small businesses in peril. To allow it to operate as intended, Congress could look to some of the excess PPP to fully fund the program.
Additional congressional action in other existing programs could greatly benefit America’s small businesses. The SBA’s 7a Disaster Bridge Loan’s guaranty should increase from 50 percent to 100 percent and the program participation should be expanded to include non-SBA lenders, like PPP. The SBA loan payment subsidy that has sustained small business cash flow should be extended through 2020, providing hope that they can sustain this crisis.
Finally, the Main Street Lending Program currently has a minimum loan amount of $250,000, which in reality excludes a significant percentage of America’s true “Main Street” businesses. Many businesses we communicate with who want to access this program have fewer than 10 employees and are seeking loans for $20,000 or less, never approaching the threshold outlined by Congress. The minimum should be eliminated.
These small businesses are the backbone of our nation and by excluding them from the lending program, Washington, D.C., is picking winners and losers and likely condemning these businesses unnecessarily to failure in the aftermath of COVID-19.
Congress demonstrated earlier this year it can be nimble, bold and solutions-oriented. We need Congress to channel this same American spirit and stay focused on the crisis at hand to support their constituents and small-business job creators before it’s too late.
Jill Castilla is CEO and vice chairman of Citizens Bank of Edmond in Edmond, Okla., and co-founder of PPP.Bank.
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