Skip to main content

ICYMI: A Recap of BPC's 'Saving Small Business' Events

Share
Read Next

The COVID-19 pandemic and resulting economic crisis have left nobody untouched. Hit particularly hard have been small businesses, which employ roughly half of America’s private sector workforce. Many have been forced to close due to government shutdown orders, laying off or furloughing their employees. Once the crisis abates, many small businesses may not be able to reopen.

Congress and the Administration have responded with $350 billion in loan guarantees through the Paycheck Protection Program (PPP) and several billion more in Economic Injury Disaster Loans (EIDL). Discussions are underway on Capitol Hill for another round of small business support.

Last week, as it was announced that funding for PPP and EIDL assistance had been exhausted, the Bipartisan Policy Center (BPC) hosted two virtual events on “Saving Small Business.” These events brought together former Small Business Administration (SBA) officials as well as those with a ground-level view of events. (A list of panelists appears at the end of this post.) Both events were moderated by Mark Walsh, BPC board member and former SBA official.

Our goals were to bring some perspective and experience to bear on the current crisis as well as its short- and long-term implications.

“Huge Fallout”

An overriding theme of the discussions was the persistent challenge of simply coming to grips with the scale of what is happening and what is still needed. During a National League of Cities call this week, SBA Senior Advisor Ryan Lambert pointed out that, on the highest-volume day of the financial crisis a decade ago, the SBA processed around $1 billion in loan applications. On the first day of PPP, it processed $5 billion.

Our panelists offered a variety of views on the current crisis.

“Dump Truck” of Money

The sheer magnitude of the crisis and government response have, not surprisingly, created administrative challenges. The SBA and its network of lenders were asked to approve a decade’s worth of loans in the span of two weeks. Grafted onto existing processes that are “cumbersome” and “clunky,” this has created additional difficulties for regulators, administrators, and, not least, business owners.

Nevertheless, our panelists offered praise for the work of the SBA and lenders.

Now What?

More help is clearly needed for small businesses, both in the form of additional financial assistance and changes that can make PPP and EIDL more effective. Four key recommendations emerged in particular from our second panel.

First, restrictions on the use of PPP funds should be loosened to permit greater flexibility on the part of small businesses. This idea appears to be gaining some wider traction.

Second, a “restart fund” should be created for those businesses that have already failed or will fail irrespective of government aid. Such a fund would remove the failed businesses from the existing bankruptcy system and help them deal with mounting debt and legal issues.

Third, the SBA should issue simple, straightforward, unambiguous guidance on the potential penalties for non-compliance with PPP terms and conditions. Regulatory guidance has been changing nearly daily and regulators should recognize that businesses will make mistakes in their use of PPP funds. Lack of clarity, however, is making things harder and more complicated for business owners.

Lastly, given the unique role that nonprofits play in the crisis and its impact, perhaps the PPP size limit (500 employees) should be removed for nonprofits.

Implications for the Future

In the near term, our panelists agreed that the current experience will—and should—accelerate technological modernization at the SBA. This includes greater collaboration with fintech companies. Technological upgrades to make SBA processes better, faster, and easier will be a top post-crisis priority.

Panelists offered a variety of mostly optimistic thoughts about what the crisis means for the future.

List of panelists and links to bios:

Moderator

  • Mark Walsh, BPC board; former Associate Administrator, Investment and Innovation, SBA

Video Recordings, annotated:

  • Panel 1
    • What’s happening currently
      • Rebeca, 20:09-21:37
    • Perspective on the response so far
      • Javier, 14:22-14:46
      • Rebeca, 36:55-39:00
    • On small business and the SBA generally
      • Maria, 6:19-6:48
      • Maria, 7:10-7:36
      • Ann Marie, 10:08-1025
      • Maria, 8:00-8:20
      • Rebeca, 24:51-26:36
    • Technology and small business policy
      • Ann Marie, 18:46-19:20
      • Rebeca, 21:38-22:09
    • If you had a magic wand, what is the one thing you would do now?
      • Ann Marie, 50:33-52:04
      • Javier, 52:16-53:37
      • Rebeca, 53:40-54:49
      • Maria, 55:01-56:16
    • Implications for the future
      • Ann Marie, 11:50-12:44 and 40:21-42:14
      • Javier, 44:05-45:24
      • Maria, 47:07-48:09
  • Panel 2
    • Scale of current situation
      • Holly, 19:41-21:26
    • Praise for the work done so far
      • Chris, 14:08-17:55
    • The impact on nonprofits
      • Steve Preston, 33:10-35:32
    • On what success might look like and how it will be judged
      • Chris, 41:10-43:14
      • Steve, 45:39-47:08
      • Holly, 43:26-44:41
    • If you had a magic wand, what is the one thing you would do now?
      • Chris, 53:46-55:25
      • Steve, 51:58-53:08, 55:34-56:27
      • Holly, 53:13-53:44, 56:29-57:02
Tags
Share