Mnuchin, SBA administrator vow small businesses will be supported during coronavirus
Small Business Association Administrator SBA Jovita Carranza says small businesses play a vital role in the U.S. economy and explains the paycheck protection program and loans that will be distributed to those who need them. Treasury Secretary Steven Mnuchin says small businesses that have 500 or fewer employees should contact their lenders for benefits.
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The extraordinary measures needed to defeat the coronavirus have delivered a hard blow to American workers and our economy.
Less than a month ago – on March 6 – the Labor Department reported that the economy had once again exceeded forecasts by adding 275,000 jobs, with unemployment tying a 50-year low. Last week, we reported the loss of 701,000 jobs, and that more than 6.6 million Americans had filed for unemployment.
These sudden job losses are different from any period of high unemployment in the past. It does not result from any underlying weakness in the economy. Instead, it's the result of purposeful and short-term measures – a necessary pause – to protect public health.
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Our twin goals now must be, first, to make that pause work, and second, to put workers and business in a position to get back to work quickly once the virus is contained.
The first goal depends critically on the public’s ongoing compliance with the social distancing directives and hygiene guidance being provided by the White House and public health officials. The second goal will be advanced through swift action by government and the private sector.
SMALL BANKS HAVE PROCESSED $2B FOR SMALL BUSINESS LOAN RELIEF
President Trump and Congress have responded with tremendous speed and near unanimity to the challenges American workers are facing.
Two weeks ago, the president signed the Families First Coronavirus Response Act, which provides paid sick leave and family leave for workers at small businesses affected by the virus, with dollar-for-dollar reimbursement to the company.
The following week the president signed the CARES Act, which includes direct cash payments of $1,200 to individual Americans — plus $500 for dependent children — and a $600 weekly boost to unemployment insurance benefits.
These measures are important. We want Americans who have the virus to exit the workplace and get better, and we want workers to be able to care for family members at home who need them.
WHAT APPLICANTS NEED TO KNOW ABOUT THE SMALL BUSINESS LOAN PROGRAM
It’s also right to have unemployment payments that help make workers whole for losses that result from no fault of their own, but from the government’s decision that public health requires workers to stay home for a period of time.
That said, unemployment is not the preferred outcome when government stay-at-home orders force temporary business shutdowns.
We want workers to have work, not to become dependent on the unemployment system. And for business owners and entrepreneurs who spent time and resources recruiting and training a skilled workforce, losing their connection to those employees can be a great loss. As recently as a month ago, many business leaders' biggest concern was the difficulty of finding skilled workers.
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In signing the CARES Act, President Trump addressed these concerns with an unprecedented new program at the Small Business Administration (SBA) – the Paycheck Protection Program, a $350 billion fund designed to provide small businesses with an immediate economic lifeline.
Small businesses often lack the reserves and access to liquidity that large companies can call upon in hard times.
The Paycheck Protection Program addresses this by offering small business loans of up to $10 million. The line of credit, guaranteed by the SBA, may be used to cover wages, health benefits, rent, utilities, and more. And critically, the loans are forgivable if the business retains and continues paying its workers for eight weeks.
This loan forgiveness even applies to businesses that have already furloughed or laid-off workers, provided they move quickly to put them back on payroll.
Eligible business owners, which include independent contractors and the self-employed, can apply for the loans now, by completing a simple application and submitting it to any existing SBA lender or participating federally insured bank or credit union. For more information, prospective borrowers and lenders can visit the SBA’s website at www.sba.gov.
Americans were enjoying a booming, vibrant economy just weeks ago. In getting back to that place as quickly as possible, few things will be more valuable than small businesses availing themselves of programs like the Paycheck Protection Program, to help keep workers on payroll.
Eugene Scalia is U.S. Secretary of Labor and Jovita Carranza is Small Business Administration Administrator.
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