The country is losing 33 thousand jobs every hour of every day. The Labor Department announced today that 5.2 million Americans filed for unemployment benefits last week, bringing the total over the last four weeks to 22 million — or 14 percent of the people employed prior to this crisis.
The Paycheck Protection Program (PPP), which passed as part of the recent $2.3 trillion stimulus bill, is helping to stanch even more job loss. It provides small businesses, which employ roughly half the nation’s workforce, with two months’ worth of loans to bridge this economic crater and stay afloat. These loans, which are capped at 2.5 times monthly payroll expenses, are forgivable to the extent that businesses maintain their staffing, providing owners with a strong incentive to keep their employees through this crisis.
It’s no surprise that this program has been an overwhelming success. More than 1.5 million PPP loans have been approved with a total value of more than $324 billion through Wednesday, according to the Small Business Administration. The average loan size is around a quarter-million dollars, meaning the PPP has already saved several million jobs nationwide.
Yet the PPP risks becoming a victim of its own success. The stimulus legislation only funded the program with $349 billion, which is now exhausted. Without a top-up, countless small businesses will be left in the lurch, inflating already stratospheric unemployment levels even further. According to Rohit Arora, CEO of Biz2Credit, 75 percent of small businesses will fail if they don’t receive a cash injection within 60 days.
Senate Republicans are working to pass pro-forma Senate legislation that will add $250 billion worth of funding to the PPP. Yet Senate Democrats are demanding new bureaucratic reporting requirements and a corresponding funding increase for hospitals and state and local governments as a condition of support.
Requiring loan applicants to submit to racial and other personal bureaucratic requirements as a new loan condition would slow down the loan process when entrepreneurs need liquidity now. Funding for hospitals and state and local governments may be worthwhile, but these programs haven’t run out money, while funds for small businesses have dried up. Legislators can consider these broader issues as part of the larger Phase 4 stimulus legislation that’s forthcoming and instead agree to another $100 billion in PPP funds in addition to the proposed $250 billion expansion to make the PPP a $700 billion package in total.
“There is no time to insist on sweeping renegotiations or ultimatums about other policies that passed both houses unanimously,” said Sen. McConnell in a statement Tuesday. “Clean funding for worker pay in a crisis should not be controversial.”
As evidenced by the number of loans processed in such a short period of time, the simple PPP process is one of its major features. I’ve heard from numerous small business owners who appreciate this streamlined process, which is a welcome change from past Small Business Administration programs. For instance, Rick Pogue, co-owner of Arrowhead Building Supply outside St. Louis, said that he was notified the next business day after a smooth application process that he had been approved for funding, saving the jobs of his 130 employees.
PPP funding is not only vital for the existing workforce but also for the economic recovery. Since small businesses create two-thirds of all new jobs, they must be able to weather this temporary economic storm, so they can be positioned to quickly ramp up in the months ahead when the public health threat abates. Expanding the PPP will save jobs now and create them in the future. Congress must fund it immediately.
Alfredo Ortiz is the president and CEO of the Job Creators Network.