CEOs Warn Congress of Small Business Failures Without More Aid
(Bloomberg) -- A group of U.S. corporate leaders led by Starbucks Corp.’s former head, Howard Schultz, pressed lawmakers for additional, longer-term support for small businesses, including federally guaranteed loans that could be turned into grants, at least partially, for those hardest-hit by the pandemic.
“By Labor Day, we forsee a wave of permanent closures if the right steps are not taken soon,” Schultz said in a letter to Congress signed by almost 100 leaders, including the chief executive officers of Walt Disney Co., Merck & Co., Alphabet Inc. and Walmart Inc.
The Paycheck Protection Program, the centerpiece of federal aid to small businesses, has provided a short-term relief to many, but small firms need help to sustain themselves through 2020 and well into 2021, the executives said in their letter to the four congressional leaders.
Their proposed new loans should be delivered fast, building on the existing infrastructure of the PPP, whose loans are distributed by approved lenders. Borrowers should have flexibility in how they use the funds, and the new loans should flow to businesses that need it most, particularly those owned by minorities, the CEOs said in their letter. A portion of the money should be directed to financial groups that cater to low-income areas, known as community development financial institutions and minority depository institutions, according to the letter.
The CEOs are calling for action as Democrats and Republicans remain far apart on a new virus stimulus package -- which would include a portion for small businesses. Both sides are considering a second round of PPP, which was extended to Aug. 8 and still has billions of dollars available.
Another round of PPP would be helpful, but it wouldn’t be enough, the leaders said in their letter. Schultz, a former longtime Democrat, last year considered running as an independent candidate for president in 2020.
The PPP, which launched April 3, has approved more than 5 million loans totaling about $520 billion, according to the Small Business Administration. Supporters say it helped millions of firms keep tens of millions of workers employed. Critics say the smallest companies and those in disadvantaged areas have been shut out while politically connected businesses and firms that aren’t struggling have gotten funding.
“From retailers and restaurants to consulting and manufacturers, small-business owners are facing a future of potential financial ruin that will make the nation’s current economic downturn last years longer than it must,” the corporate leaders said in their letter. “We cannot stress enough the urgent need to act.”
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